The RBI on Friday unveiled its bi-monthly monetary policy review, with Governor Shaktikanta Das making a strong case for continued fiscal, monetary and sectoral support to nurture the “nascent and hesitant” economic recovery, while retaining the growth projection for the current fiscal at 9.5 per cent.

Das said domestic economic activity has started normalising with the ebbing of the pandemic second wave and the phased reopening of the economy. High-frequency indicators suggest consumption (both private and government), investment and external demand are all on the path of regaining traction, he added.

However, he said that at this stage “continued policy support from all sides—fiscal, monetary and sectoral—is required to nurture the nascent and hesitant recovery.” The governor said the conduct of monetary policy during the pandemic has been geared to maintain congenial financial conditions that nurture and rejuvenate growth.

Taking various factors into consideration, RBI decided to retain the GDP growth forecast for the current financial year at 9.5 per cent in 2021-22. It is expected to be at 21.4 per cent in the first quarter of the fiscal; 7.3 per cent in the second quarter; 6.3 per cent in the third and 6.1 per cent in the January-March period. Real GDP growth for the first quarter of the next fiscal, beginning April 1, 2022, is projected at 17.2 per cent.

Das further said after the onset of the pandemic, the central bank has announced more than 100 measures to mitigate its impact. “Going forward, our endeavour will be to continue monitoring of measures which are still in operation, to ensure the benefit of all our measures percolate down to targeted stakeholders,” he said. He stressed that the efficacy of RBI’s monetary policy measures and actions is reflected in the significant improvement in transmission during the current easing cycle.

The reduction in repo rate by 250 basis points since February 2019 has resulted in a cumulative decline by 217 basis points in the weighted average lending rate (WALR) on fresh rupee loans. The low interest rate regime, he added has also helped the household sector reduce the burden of loan servicing.

The significant reduction in interest rates on personal housing loans and loans to commercial real estate sector augurs well for the economy, as these sectors have extensive backward and forward linkages and are employment intensive, the Governor said.