New Delhi, April 4: The Reserve Bank of India (RBI) on Thursday announced its monetary policy under governor Shaktikanta Das. The central bank adopted a pro-growth stance and cut repo rate by 25 bps to 6 percent from 6.25 percent. With this move, interest on loans will be reduced. According to reports, Pami Dua, Ravindra Dholakia, Michael Debabrata Patra and Das voted in favour of the decision to reduce the policy repo rate. However, only Chetan Ghate and Viral Acharya voted to keep the policy rate unchanged. Nifty Hits Lifetime High of 11,761 Ahead of RBI’s Monetary Policy.
The expectation of poor rainfall and already slow economic growth alongside subdued inflation pressurised the RBI to go for a higher rate cut. Gross Domestic Product (GDP) growth for 2019-20 is projected at 7.2 percent. Das said, " GDP projection for 2019-20 is kept at 7.2 percent, 6.8 to 7.1 percent for the first half of 2019-20 & 7.3 to 7.4 percent for the second half." Meanwhile, the Consumer Price Index (CPI) for 2018-19 is revised to 4.7-5.1 percent in H1 FY19 and 4.4 percent in H2. The path of CPI inflation is also revised downwards to 2.4 percent in Quarter 4 of FY19. Sensex, Nifty Start on a Cautious Note Ahead of RBI Policy Outcome.
In February this year, the CPI inflation was accelerated to a four-month high of 2.57%, while the Index of Industrial Production (IIP) slowed to 1.7%. As per the RBI data, India's foreign exchange (forex) reserves surge for a third week in a row, adding USD 1.029 billion to USD 406.667 billion in the week to 22 March. In March 2019, the RBI had said that it would infuse Rs 12,500 crore into the financial system through open market operations.