India’s RBI Sees No Threat to Growth From Virus Wave Just Yet
(Bloomberg) -- India’s central bank doesn’t see any need just yet to cut the economy’s growth forecast for the next fiscal year, even as a new wave of coronavirus infections sweeps the world’s second most-populous nation.
“At this point of time one does not foresee a lockdown like last year,” Reserve Bank of India Governor Shaktikanta Das said at the seventh edition of the India Economic Conclave organized by the Times Group. “Notwithstanding some new strains, I would feel that the revival of economic activity which has happened should continue unabated going forward.”
The RBI last month upgraded its growth forecast, seeing 10.5% expansion in the year starting April 1. That compares with an estimated 7.7% contraction in the current fiscal year after one of the world’s strictest lockdowns to combat the virus crippled economic activity in a nation where consumption makes up about 60% of gross domestic product.
Those estimates came before the nation started witnessing a spike in new coronavirus cases across several parts of the country. Confirmed daily infections have risen to more than 50,000 from a low of about 9,800 in February, pushing the overall tally past the 11.7 million mark.
The western Indian state of Maharashtra, which contributes 14.5% to the country’s overall GDP and is home to the nation’s financial hub Mumbai, is among the worst hit. While some districts in that state have gone back into a lockdown, other provinces such as Tamil Nadu, Kerala and Punjab have also been grappling with fresh outbreaks in recent weeks.
“My understanding and our preliminary analysis shows that the growth rate in next year would not require a downward revision,” Das said.
His comments come days before the Monetary Policy Committee is due to review interest rates next month. The central bank, which has been at the forefront of providing support to the economy through the pandemic, had lowered borrowing costs by 115 basis points last year before pausing in the face of a surge in inflation.
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