The Reserve Bank of India kept key policy rates unchanged on Wednesday as the economy faces a renewed threat to growth from the Covid-19 pandemic, with new cases hitting a record.
Repo rate and the reverse repo rate remain unchanged at 4 per cent and 3.35 per cent. "The stance of the monetary policy will remain accommodative till the prospects of economic recovery are not sustained," said RBI governor Shaktikanta Das in Mumbai after a three-day meeting of the regulator’s monetary policy committee.
The central bank also retained its growth outlook for the fiscal year started April 1 at 10.5%, unchanged from its February outlook.
“The recent surge in infections has, however, imparted greater uncertainty to the outlook,” Das said. “Localised and regional lockdowns could dampen the recent improvement in demand conditions and delay the return of normalcy.”
A status quo on rates and stance was expected by all 10 economists and market experts that Business Standard polled earlier this week.
India reported a record rise in coronavirus infections on Monday, becoming only the second country after the United States to register more than 100,000 new cases in a day. The rise in virus cases could impact the economy if the country imposes nationwide lockdowns that impact industries and consumption, but so far that hasn't been the case.’
The International Monetary Fund (IMF) raised on Tuesday its projection for India's economic growth in the current financial year by one percentage point to 12.5 per cent. Experts, however, say the estimate is highly ambitious, given the recent rise in Covid-19 cases in the country and the resultant partial lockdowns in some states.
The forecast, published in the IMF's World Economic Outlook, suggests India would again become the fastest-growing large economy in the world.
Wednesday’s policy announcement was the first for the MPC after review of the inflation mandate. The mandate remains the same, allowing policy continuity.
(With inputs from agencies)