- The
Monetary Policy Committee (MPC ) left rates untouched and maintained its ‘accommodative’ stance on economic recovery today, on June 4. - It has revised its
GDP growth projection for the Indian economy to 9.5% — 100 basis points lower than its earlier estimate of 10.5% in April. - With its mandate to keep inflation within the 2-6% band, the MPC hopes to keep consumer inflation at 5.1% in 2021-22.
Reserve
This is after India’s economy contracted by a massive 7.3% in the previous financial year
The forecast of a normal south west monsoon, the resilience of agriculture, the adoption of
Inflation is likely to remain elevated at 5.1%
The MPC’s mandate is to keep inflation within the prescribed limits of 2% to 6%. And, for the ongoing financial year, it expected the increase in prices to remain within 5.1%.
The Consumer Price Index (CPI) was slightly lower in April at 4.2% — compared to 5.52% in March — but the onset of lockdowns and surge in COVID-19 cases has created a lot of disruption in the last one month. Nonetheless, Das is hopeful that the downswing will continue with the onset of a normal southwest monsoon and the second wave subsiding.
However, rising crude oil prices leading to a broad based surge in commodity prices and logistics costs, could worsen cost conditions. According to Das, weak demand conditions may temper the impact, and the pass through to consumer inflation.
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