Demand has moved beyond pent-up to actual one: RBI Guv Shaktikanta Das

Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday said demand in the economy has moved from being of pent-up nature to actual one, and the momentum is likely to sustain.

"Demand has now moved beyond pent-up demand to actual demand coming up. As the lock down gets steadily lifted and movements are allowed within cities and across the country, the demand will pick up. I think the demand curve is expected to be now much more sustained," Das told reporters during the post-policy conference call.

He added that the central bank monitors a long list of high-speed indicators and all are pointing towards a growth in demand.

The monetary policy projected real GDP growth of 10.5 per cent for the next financial year. The Economic Survey 2020-21, tabled by the government in Parliament recently, projected that the economy will grow at 11 per cent, up from an estimated historic decline of 7.7 per cent in 2020-21, on account of the COVID-19 pandemic.

The Monetary Policy Committee on Friday also left the policy rate unchanged at 4 per cent and decided to continue with the accommodative stance to support growth.

The six-member panel said the stance will continue to be accommodative at least through the current financial year and into the next year to revive growth on a durable basis and mitigate the impact of COVID-19 while ensuring that inflation remains within the target going forward.

The Governor said as in the previous policy, the decisions on repo rate and stance were unanimous in the current MPC meeting.

RBI has projected CPI inflation at 5.2 per cent in the fourth quarter of FY21, 5.2 per cent to 5 per cent in H1 FY22 and 4.3 per cent for Q3 FY22.

The central bank said it is expected that vegetable prices will remain soft in the near-term while pressures may continue to persist in certain key food items. The outlook for core inflation is influenced by the escalation in cost-push pressures seen in recent months.

"All these aspects have been taken into account and have been duly factored into our projection for CPI inflation. Based on that, the MPC has decided to continue with the accommodative stance," he added.