India’s central bank on Friday left key interest rates unchanged amid rising inflation even as it projected a faster recovery for the beleaguered economy.
The Reserve Bank of India (RBI’s) monetary policy committee kept the repurchase rate it charges on loans to commercial banks at four per cent, holding the key lending rate at existing levels for a third consecutive review.
The bank revised its forecast for gross domestic product growth for the financial year to 7.5 per cent, from its assessment of 9.5 per cent in October.
India’s financial year runs from April to March.
The upward revision came as RBI Governor Shaktikanta Das expressed hope about economic growth in the second half of 2020 to 2021.
According to him, the rural economy continues to lead overall recovery while urban demand is accelerating.
India’s economy contracted by a record 23.9 per cent in the first quarter and 7.5 per cent in the second quarter ending September on account of the COVID-19 pandemic, and is on track to record its worst annual contraction in more than four decades.
A country is considered to be in recession if it reports contraction for two consecutive quarters.
After one of the world’s strictest lockdowns that started at the end of March, causing massive job loss in a major blow to an already slowing economy, India has been gradually reopening economic activities and easing restrictions on mobility since mid-May.
India has the world’s second-largest caseload after the U.S., with more than 9.5 million infections and 139,188 deaths.
