GDP likely to contract 9.5% in FY’21: Reserve Bank of India

The Reserve Bank of India on Friday said the economy is likely to contract by 9.5 per cent in the current fiscal.

GDP contracted 23.9 per cent in the first quarter of the fiscal, as per the estimates of the Central Statistics Office (CSO).

In a statement after the meeting of the Monetary Policy Committee, RBI Governor Shaktikanta Das said Indian economy is entering into a decisive phase in the fight against coronavirus.

Das also said contraction in economic growth witnessed in the April-June quarter of the fiscal is "behind us" and silver linings are visible, and higlighted the uptick in manufacturing sector, and energy consumption, among others.

According to him, inflation too is likely to ease to the target level in the fourth quarter of 2020-21.

The retail inflation (CPI), which the RBI factors in its monetary policy, has remained above 6 per cent in the recent months. The government has tasked RBI to keep the inflation at 4 per cent, wit a margin of 2 per cent on either side.

The governor said GDP is likely to contract by 9.5 per cent in the fiscal ending March 2021.

Das also said growth is likely to pick up in the second half of the fiscal and enter into the positive zone in the January-March quarter.

The spread of coronavirus and resultant lockdown had severely hit the economic activities in the country.