RBI cuts growth forecast from 7.1% to 6.9%

RBI cuts growth forecast from 7.1% to 6.9%

 The Reserve Bank of India on Wednesday revised its growth forecast for the current fiscal from 7.1% to 6.9%. The central bank had, at its previous monetary policy meeting in December, cut the projection from 7.6% to 7.1%.

“Growth is expected to recover sharply in 2017-18 on account of several factors,” the RBI said in its sixth bi-monetary policy statement. It has projected a more robust growth of 7.4% for 2017-18.

The RBI’s revision comes just weeks after the International Monetary Fund cut India’s GDP forecast by a whopping 1%, from 7.6 to 6.6%, attributing it to the consumption shock caused by demonetisation. The World Bank has also lowered India’s growth forecast to 7%, from a previous estimate of 7.6%. The Economic Survey, just prior to the Budget, had pegged growth for the current fiscal at 6.5%.

On January 6, the government’s Central Statistics Office, in its advance estimates for 2016-17, had placed India’s growth at 7%, down from 7.8% a year ago. The RBI said inflation in the last quarter of the current financial year could be below 5%.

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