Economy in stage of recovery, would need continued policy support: CII

New Delhi: Referring to the Reserve Bank of India’s (RBI) readings on the current growth of the Indian economy, the Confederation of Indian Industry (CII) on Friday said that it is in the stage of recovery, and would need continued policy support even after the inflation trajectory turned out better than expected.

“When there have been encouraging signs of improvement noted across several pockets of growth lately, we are in consonance with RBI’s reading that the current growth recovery process would need continued policy support even as the inflation trajectory has turned out to be more favourable than expected,” Director General of CII Chandrajit Banerjee said. Lauding the Reserve Bank of India’s (RBI) decision to keep the repo rate unchanged and to continue with an accommodative stance, he said that the decision was a ‘prudent’ one.

“”The decision of the RBI to keep the interest rates unchanged while continuing its accommodative stance is a prudent one in view of the uneven path of recovery momentum,” Banerjee said.

The RBI has kept the repo rate unchanged for the eighth time straight and continued with an accommodative stance.

The repo rate — the central bank’s lending rate — remains unchanged at 4 per cent and the reverse repo rate — borrowing rate — at 3.35 per cent.

“The stance remains accommodative as long as necessary to revive and sustain growth on a durable basis, and continue to mitigate the impact of COVID-19 on the economy,” RBI Governor Shaktikanta Das said.

“The worst of the second wave is behind us, and substantial pickup in COVID-19 vaccination, giving greater confidence to open up and normalise economic activity,” he added.

The projection for real Gross Domestic Product (GDP) growth is retained at 9.5 per cent for the financial year (FY) 2021-22. This consists of 7.9 per cent in the second quarter, 6.8 per cent in the third quarter and 6.1 per cent in the fourth quarter of 2021-22.

Notably, the Consumer Price Index (CPI) inflation for the first quarter of the financial year (FY) 2022-23 has been projected at 5.2 per cent.

“High-frequency indicators suggest economic activity has gained momentum. Core inflation remains sticky. July-September Consumer price Index (CPI) inflation was lower than anticipated,” the RBI Governor added.