RBI projects 7.4 pc GDP growth for FY20

Mumbai, Feb 7 The Reserve Bank of India Thursday projected an economic growth rate of 7.4 percent for the next fiscal, up from 7.2 percent assessed for the current financial by Central Statistics Office (CSO).

The (GDP) growth is probably going to be influenced by growth in bank credit and overall financial flows to the commercial sectors, however moderating worldwide interest could play a dampener, said a RBI document released after the three-day meeting of the central bank's Monetary Policy Committee (MPC).

The RBI had projected the GDP development for 2018-19 in the December policy at 7.4 percent (7.2-7.3 percent in H2) and at 7.5 percent for H1:2019-20, with dangers to some degree to the downside.

The CSO has estimated GDP development at 7.2 percent for 2018-19.

"Looking past the present year, the development viewpoint is probably going to be influenced by... aggregate bank credit; and generally speaking budgetary streams to the business part keep on being solid, however are yet to be expansive based," the MPC said.

It further said that in spite of soft crude oil prices and the lagged effect of the recent depreciation of the Indian rupee on net exports, slowing global demand could pose headwinds.

"In particular, trade tensions and associated uncertainties appear to be moderating global growth," it said.

RBI Governor and member of the MPC Shaktikanta Das said the dangers are uniformly adjusted for development.

The six-member MPC, headed by Das, also noticed that the output gap has opened up modestly as real yield has inched lower than potential.

Investment activity is recuperating, but supported mainly by public spending on infrastructure, it said.

The need is to strengthen private investment activity and buttress private consumption, said the MPC document, as the central bank reduced the key lending rate by 0.25 per cent, for the first time in the current fiscal.