RBI growth projection in line with Eco Survey: Finmin

The finance ministry today welcomed the Monetary Policy Committee's (MPC) projection of higher GDP growth and lower inflation in the current fiscal.

The MPC's growth projection of 7.4 per cent is in line with the Economic Survey, the ministry said in a statement.

MPC has projected inflation at 4.5 per cent in the fourth quarter of the last fiscal.

In its first bi-monthly policy review of 2018-19, Reserve Bank of India today kept the key interest rate unchanged but cut its inflation forecast on lower food prices, sparking a rally in the stocks and bond markets.

MPC, headed by RBI Governor Urjit Patel, revised upwards its forecast of real GDP growth from 7.2 per cent in its February Statement to 7.4 per cent, which the ministry said is "broadly in line with the forecast in the Economic Survey".

It further said that "inflation in fourth quarter 2017-18 has been revised downwards from 5.1 per cent to 4.5 per cent. Further, MPC has maintained all policy rates unchanged. Government welcomes the policy statement".

While keeping the benchmark repurchase or repo rate unchanged at 6 per cent and reverse repo at 5.75 per cent for the fourth time straight, the 6-member MPC retained the 'neutral' stance.

The decision of MPC comes against the backdrop of government's assertion that both the fiscal deficit as well as the revenue shortfall in 2017-18 will be lower than the upwardly revised estimates given in the Union Budget.

The government has also announced that its market borrowing would be only Rs 2.88 lakh crore in the April-September period of 2018-19 as against Rs 3.72 lakh crore it had borrowed in the corresponding period of the last fiscal, 2017-18, ended on March 31.