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Fourth bi-monthly policy review: RBI
The Reserve Bank of India (RBI) lowered its key lending rate or the repo rate by 0.25 per cent — from 5.40 per cent to 5.15 per cent — on 4th October in its fourth bi-monthly policy review. This is the fifth straight cut in its rates by the RBI in 2019.
RBI cuts repo rate by 25 bps to 5.15%, lowest since March 2010.
The MPC decided to continue with an accommodative stance as long as “it is necessary to revive growth, while ensuring that inflation remains within the target.”
All members of the MPC voted in favour of reducing the repo rate. Chetan Ghate, Pami Dua, Michael Debabrata Patra, Shri Bibhu Prasad Kanungo and Shri Shaktikanta Das voted for the 25 basis points rate cut. Ravindra H Dholakia voted for a 40 basis points rate cut.
| Repo Rate | 5.15% |
| Reverse Repo Rate | 4.90% |
| Marginal Standing Facility(MSF) Rate | 5.40% |
| Bank Rate | 5.40% |
| Cash reserve Ratio(CRR) | 4% |
| Statutory Liquidity Ratio(SLR) | 18.75% |
RBI cuts FY20 GDP forecast to 6.1%
The six-member committee revised the GDP target for FY20 to 6.1 per cent from 6.9 per cent, earlier.
India, which is Asia’s third-largest economy, expanded by just 5 per cent in the June quarter, its slowest pace since 2013. That had raised expectations the RBI will be forced to further downgrade its growth projection of 6.9 per cent for the current fiscal year.
The GDP growth is seen at 5.3 per cent in September quarter and in the range of 6.6-7.2 per cent in the rest six months of FY20. The GDP growth for June quarter of 2020 (Q1FY21) is revised downwards to 7.2 per cent.
| Organization | 2019-20 | 2020-21 |
| Fitch (Updated- 27 August) | 6.4% | 7.1%
(7% FY- 2021-22) |
| UNCTAD report (Updated-26 September) | 6% | |
| RBI forecasted (4th October) | 6.1% | |
| Moody (Updated- 23 August) | 6.2% from the previous estimation of 6.8%- FY2019 | 6.7% – FY2020 |
| ADB | 6.5% (Updated-25 September 2019) | 7.2% |
| World Bank (Updated- 5 JUNE) | 7.5% | 7.5% |
| World Economic Outlook released by International Monetary Fund (IMF) | 7% (Updated-13 September 2019) | 7.2%(Updated-13 September 2019) |
| FICCI (Updated -28 August) | 6.9% | 7.2% |
| S&P (Updated -2 October) | 6.3% | 7% |
| Organisation for Economic Co-operation and Development (OECD) | 5.9% (Updated 20 September ) | 6.3% (Updated 20 September ) |
| DBS Bank | 6.2% (Updated-2 Sep 2019) | |
| Goldman Sachs | 7.2% (Updated-7th June 2019) | |
| Central Statistics Office (CSO) | 7.1% (Updated-30 May 2019) | 7.2% (Updated-30 May 2019) |
| CRISIL | 6.3 % (Updated-4 Sep 2019) | |
| National Council of Applied Economic Research (NCAER) | 6.2% (Updated- 14 August) | |
| Australia and New Zealand Banking Group (ANZ) | 6.2% – FY 2019 (Updated- 16 August) |
6.5% (Also FY2021-6.5%) |
| India Ratings & Research | 6.7% compared to its previous estimate of 7.3%- FY 2020. (Updated- 27 August) | |
| Economy Survey | 7% |
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