New Delhi: The Reserve Bank of India (RBI)’s Monetary Policy Committee (MPC) on Thursday cut its Gross Domestic Product (GDP) growth forecast for FY20 to 7 per cent from what was previously projected 7.2 per cent.
Earlier this year, in its April meet, the RBI had cut its growth forecast for the current fiscal to 7.2 amid signs of weakening domestic investment activity as reflected in a slowdown in production and imports of capital goods.
For the first half of FY20, the GDP growth is seen at 6.4-6.7 per cent, down from the previous projection of 6.8-7.1 per cent.
The GDP growth forecast for the second half of the financial year has been revised to 7.2-7.5 per cent from 7.3-7.4 per cent projected earlier.
RBI's MPC delivered a third consecutive rate cut in six months in an effort to boost credit growth and revive the sluggish economic activity in the country.
The six-member committee voted in favour of an aggressive 25 basis points reduction in the key policy rate. One basis point is a hundredth of a percentage point. The RBI cut its key rates by 25 basis points, bringing the repo rate down to 5.75 per cent from 6 per cent.
Additionally, India's economy grew at its slowest pace in more than four years in the January-March period, falling behind China's pace for the first time in nearly two years and raising the prospect of fiscal stimulus and a rate cut. Ministry of statistics came out with its report last week, a day after the new Modi government took charge.
Asia's third-largest economy grew at a much slower-than-expected 5.8% in the last quarter, compared with 6.4% in China, government data showed on Friday.
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