Mumbai: The Reserve Bank of India (RBI) on Friday said the economy is likely to contract by 9.5 per cent in the current fiscal
The Gross Domestic Product (GDP) contracted by 23.9 per cent in the first quarter of the fiscal, as per the estimates of the Central Statistics Office (CSO).
The governor said GDP is likely to contract by 9.5 per cent in the fiscal ending March 2021.
In a statement after the meeting of the Monetary Policy Committee, RBI Governor Shaktikanta Das said the Indian economy is entering into a decisive phase in the fight against the novel coronavirus.
Das also said contraction in the economic growth witnessed in the quarter between April ad June in this fiscal is “behind us”, and that silver linings are visible. He highlighted the uptick in manufacturing sector and energy consumption, among other reasons for hope.
According to Das, inflation too is likely to ease to the target level in the fourth quarter of 2020-21.
The retail inflation (CPI), which the RBI factors in its monetary policy, has remained above six per cent in the recent months. The government has tasked the RBI to keep inflation at four per cent, with a margin of two per cent on either side.
Das also said growth is likely to pick up in the second half of the fiscal and enter a positive zone in the quarter between January and March.
The spread of the novel coronavirus and the resultant lockdown had severely hit economic activity in the country. The Centre has also come under criticism for its handling of the situation.
In mid-September S&P Global Ratings slashed its FY21 growth forecast for India to (-) nine per cent from (-) five per cent estimated earlier. It had said that rising COVID-19 cases would keep private spending and investment lower for longer.
“One factor holding back private economic activity is the continued escalation of the COVID-19,” S&P Global Ratings Asia-Pacific Economist Vishrut Rana had said.
Rising COVID-19 cases in India will keep private spending and investment lower for longer. S&P Global Ratings had expected the country's economy to contract by nine per cent in the current fiscal year, which ends March 31, 2021, the US-based rating agency had said in a statement.