RBI Governor Shaktikanta Das, during his MPC meeting which held on 4th June Friday announced that the reported Repo Rate for FY 2021 will be kept unchanged at 4%, and Reverse Repo Rate has also been kept unchanged at 3.5%.
Reserve Bank Of India and MPC also decided to continue with an accommodative stance on account of uncertainty amid the shock of the second wave of covid-19 as long as necessary to revive and sustain the growth on sustainable and durable basis and to mitigate the impact of covid-19 on the economy, so that everyone can start again by availing easy term loans as repo rate is low so the banks will offer more and more money to increase the flow of money/liquidity in the market.
Accommodative Stance means that there is a space for lowering the interest rates in the future to revive the growth and demand in the economy.
The Monetary Policy Committee(MPC) meeting lasted for 3 days between 2 June & 4 June 2021. The meeting was headed by Mr. Shaktikanta Das (RBI Governor) with another 6 panel members that assures the conditions of the macroeconomics situation on the final day of the MPC meeting, the MPC decides various factors for the economy and issues for the public.
Key highlights of Decisions taken by MPC meeting are:
1. Marginal Standing Facility Rate and Bank Rate remains constant at 4.25%.
2. The Reverse Repo Rate also remains unchanged at 3.5 % as stated by the MPC.
3. Gross Domestic Product(GDP) growth rate projections will be 9.5 % in FY 22 as forecasted, but the earlier GDP growth rate in FY 22 was estimated to be 10.5% which fell due to the Second Wave of Covid-19.
4. GDP growth rate of 3rd & 4th Quarter of FY 22 is forecasted to be 7.2 % & 6.66 % respectively.
5. RBI will purchase the Government Securities Acquisition Programme(GSAP) of ₹10000 crores on 17th June.
6. RBI’S Monetary Policy Meet 2021 Government Security(G-SEC) amount to ₹1.2 lakh crore in the 3rd Quarter of FY 22.
7. RBI will take every possible step to make the Indian economy growth stable once again.
8. RBI aims to maintain the inflation rate between 2 to 6%, as inflation is measured by Consumer Price Index(CPI) which is eased to 4.29% in April 2021 lower than 5.52% in March 2021.
9. India’s GDP for FY 21 contacted at -7.3%, but with normal southwest monsoon and global recovery, momentum may focus and support Domestic Economic Revival.
10. RBI to ensure ample liquidity in a system so that the productive sector gets adequate credit and funds.
11. RBI also announces ₹50000 crores additional liquidity facility to NABARD, NHB, and SIDBI for the fresh lending to the people in need during FY 21-22.
12. RBI enhances aggregate ways and means advances limits to stands to ₹47010, to recover from the COVID crisis.
13. RBI extends enhancement in interim ways and means advance of ₹51,560 crores to states till September.
14.Impact on growth due to decline in urban demand but rural demand expected to remain strong.