Economists had expected the MPC to stand pat on policy rate as well as on growth projections for this financial year. The rate-setting panel also decided to stick with its “accommodative” monetary policy stance for “as long as necessary”.
The panel reiterated that its “accommodative” stance will remain till growth revives “on a durable basis” and till the impact of COVID-19 on the economy is mitigated, while ensuring that inflation remains within the target going forward.
The MPC also decided to stick to its February projection of the economy growing at 10.5 per cent in real terms in 2021-22 despite the rising risk to the economic recovery from renewed localised lockdowns across the country.
The backdrop of the MPC’s meeting could not have been starker to the one held in February as the country is grappling with record daily increase in COVID-19 infections and return of localised lockdowns.
On Sunday, Maharashtra became the first major state to announce COVID-19 restrictions such as curfews, work-from-home order for the private sector and weekend lockdowns. The country’s richest state contributed nearly 14-15 per cent to overall GDP.
In Delhi and Gujarat, local authorities have announced night curfews to stem the spread of the virus raising concerns that sectors that were worst hit by the national lockdown in 2020 may see even greater pain this time around.
