The RBI Governor hoped that the country’s economy will recover on the basis of rural demand, after the steep decline in GDP in the June quarter, there has been some improvement in the economy in the September quarter.
The Reserve Bank of India (RBI) released the details of the MPC meeting on Friday. According to details, in the monetary policy review meeting held on October 7-9, RBI deputy governor and MPC member Michael Patra said that it may take years to recover the decline in GDP due to the coronavirus epidemic. Predicting a fall of around 6 per cent in GDP against the pre-Covid level, he said that the growth after Covid-19 could be in a different way as social behavior and business and workplace behavior have changed significantly.
At the same time, RBI Governor Shaktikanta Das said that rural demand can bring economic recovery. There has been an increase in consumption demand in villages. He said that there has been some improvement in the economy in the September quarter after a steep decline in GDP in the June quarter. According to the MPC, the outlook for the agricultural sector is good. But trade deficit widened slightly in Q2 over the first quarter due to slower growth in exports and declining imports.
Passenger vehicle exits fall in August
The governor said the passenger vehicle exited the fall in August. The GST ewe bill rose to pre-covid levels in September and GST revenue was better than the June quarter. Manufacturing and services PMI is also improving gradually.
Signs of economic stability in the second quarter
Discussion of MPC said that there are signs of stability in the economy in the second quarter of this business year. Manufacturing and some categories of services (such as passenger vehicles and railway freight) recovered in the second quarter due to government spending and rural demand. In the first quarter (April-June), there was a 23.9 percent decline in GDP.
RBI maintains key interest rates
In this monetary policy review meeting held on 7-9 October, RBI had left the main interest rate repo rate at 4 percent and the reverse repo rate at 3.35 percent. RBI had also predicted a 9.5 per cent decline in GDP this financial year. The central bank had said that only in the January-March 2021 quarter, the growth rate will be in the positive range.