The Reserve Bank of India’s Governor Shaktikanta Das on Thursday announced the outcomes of its bi-monthly Monetary Policy Committee meeting.
The repo rate, key lending rate, was kept unchanged at 6.5 per cent with focus on withdrawal of accommodation stance. Meanwhile, the GDP and inflation forecast were also retained at 7.2 per cent and 4.5 per cent respectively.
Here’s everything you need to know about Das and Co’s outlook for the year.
- Repo Rate: With a majority of 4:2, the committee decided to keep the stance unchanged, to ensure that inflation progressively aligns to the target, while supporting growth.
- SDF: The standing deposit facility (SDF) rate was retained at 6.25 per cent.
- MSF: Marginal standing facility (MSF) and bank rates stood at 6.25 per cent and 6.75 per cent, respectively.
- Inflation: Inflation forecast at 4.5 per cent for FY25 remained unchanged. The inflation forecast for FY26 is projected at 4.4 per cent. Inflation target on quarterly basis stands at 4.4, 4.7 and 4.3 per cent for Q2, Q3 and Q4 respectively.
- Food inflation: Food inflation could impact headline inflation if not taken into consideration and monitored closely, Das and Co. noted. “It has to remain vigilant to prevent spillovers or second round effects from persisting food inflation and preserve the gains made so far in monetary policy credibility,” Das said.
- GDP: The real GDP forecast for FY25 remained unchanged at 7.2 per cent, with GDP projections standing at 7.2, 7.2, 7.3 and 7.2 per cent respectively, for each of the four quarters of the fiscal year.
- UPI: The Central Bank projects a further expansion in the userbase of UPI. Das and Co. have proposed to introduce “delegated payments” in UPI.
- Delegated Payments: The introduction of Delegated Payments in UPI would help a primary UPI user set a UPI transaction limit for a secondary UPI user in the primary user’s bank account, the Central Bank said. RBI expects this measure to amplify the usage of digital payments across India.
- Cheque clearance: Das and Co. propose to reduce the clearing cycle for cheques from the present T+1 days to a few hours.
- Forex: India’s foreign exchange reserves have recorded a new high of $675 billion as of August 2, 2024.
- Current Account Deficit: The country’s current account deficit came down to 0.7 per cent of the GDP in FY24, a moderation from 2.0 per cent in FY23. This has been attributed to a lower trade deficit and robust service and remittances receipts.
- Deposits: External commercial borrowings recorded a moderation between April-June 2024-25, as non-resident deposits recorded higher net inflows during April-May in comparison to the previous fiscal year.
