There is a Slowdown...GDP Growth at 5% Came as a Surprise: RBI Governor Shaktikanta Das
Shaktikanta Das said the RBI had predicted growth at 5.8 per cent, and no one had predicted less than 5.5 per cent.
File photo of RBI Governor Shaktikanta Das.
New Delhi: Reserve Bank of India (RBI) Governor Shaktikanta Das in an exclusive interview with CNBC-TV18 said India's gross domestic production (GDP) growth at 5 per cent came as a surprise and was much worse than all predictions.
He also acknowledged that India is going through an economic slowdown, further stating that getting growth back on track should be the highest priority of the government.
"We (the RBI) predicted growth at 5.8 per cent. Nobody predicted less than 5.5 per cent. The number came as a surprise, worse than all predictions," said the RBI Governor.
India's GDP grew at 5 percent in the first quarter of FY20, the slowest pace in six years. Nominal GDP growth, a measure of GDP without adjusting for inflation, rose just 8 per cent, lowest in the last 7 years, indicating a deep slowdown. Consumption, the bedrock of growth in the past few years, collapsed to an 18-quarter low of 3.1 per cent from 10.6 per cent in the March quarter.
"We are analysing as to why the growth figures are so low," Das said.
In August, the central bank had pared its growth projection for 2019-20 to 6.9 per cent from its June forecast of 7 per cent, which was already downwardly revised from 7.2 per cent earlier in the year.
The lower than expected numbers and continuously downward growth spiral has put pressure on the government to bring meaningful reforms to revive growth.
Das indicated that the central bank was warning about the slowdown since the beginning of the year. Talking about early signs of the slowdown, he said, "It was very clear that there are signs of a slowdown happening and to revive investment, to revive demand, MPC (Monetary Policy Committee) decided to go for 25 bps rate cut (in February).”
“After that, 4 MPCs…if you see the minutes of the MPC…the narrative is very clear. There is a slowdown, which was evident and at the last MPC, we therefore, very clearly said that growth seems to be losing traction, and therefore, growth is a matter of highest priority."
The central bank chief pointed out that while monetary policy has a significant role to play in any economy, all stakeholders including the private sector players have to do their part to power economic growth.
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