Consumer Price Index (CPI) inflation for the first quarter of FY21 is projected at 3.6 per cent. The MPC also revised downwards GDP growth for FY20 from 7 per cent in the June policy to 6.9 per cent in August in the range of 5.8-6.6 per cent for the first half of FY20 and 7.3-7.5 per cent for the second half with risks somewhat tilted to the downside. The GDP growth for the first quarter of FY21 is projected at 7.4 per cent.
The MPC said that inflation is currently projected to remain within the target over a 12-month ahead horizon. ”Since the last policy, domestic economic activity continues to be weak, with the global slowdown and escalating trade tensions posing downside risks. Private consumption, the mainstay of aggregate demand, and investment activity remain sluggish,” it said.
Running at 3.18 per cent in June, India’s retail inflation has remained below the central bank’s medium-term target of 4 per cent for almost a year. Monsoon, after a poor start, has also picked up. Last month, the US Federal Reserve cut interest rate for the first time since global financial crisis. This allows RBI room to retain easing bias, say analysts.
The last time the RBI made so many back-to-back cuts was after the global financial crisis over a decade ago, when most major central banks were desperate to revive economic growth.
A slew of high-frequency indicators – including sliding car sales – suggest the economy is yet to recover from a dismal performance in the first three months of this year, when GDP growth slumped to a five-year low of 5.8 per cent.
The RBI said it will make National Electronic Funds Transfer(NEFT) system available on a 24×7 basis from December 2019, it added.
Currently, the NEFT payment system as a retail payment system is available for customers from 0800 hrs to 1700 hrs on all working days of the week (except 2nd and 4th Saturdays of the month).
Once the NEFT becomes available 24/7, it is expected to revolutionise the retail payments system in India.