RBI keeps benchmark lending rate unchanged at 4 per cent for the 10th time

Reserve Bank of India RBI on Thursday kept the benchmark interest rate unchanged at 4 per cent and decided to continue with its accommodative stance in the backdrop of an elevated level of inflationThis is the tenth time in a row that the Monetary Policy Committee MPC headed by RBI Governor Shaktikanta Das has maintained the status quo RBI had last revised its policy repo rate or the shortterm lending rate on May 22 2020 in an offpolicy cycle to perk up demand by cutting the interest rate to a historic lowThis is the first MPC meeting after presentation of Budget 202223 in Parliament on February 1MPC has decided to keep benchmark repurchase repo rate at 4 per cent Das said while announcing the bimonthly monetary policy reviewConsequently the reverse repo rate will continue to earn 335 per cent interest for banks for their deposits kept with RBIDas said MPC voted unanimously for keeping interest rate unchanged and decided to continue with its accommodative stance as long as necessary to support growth and keep inflation within the targetRBI retained its growth projection at 92 per cent and inflation at 53 per cent for the current financial yearRetail inflation rose to a fivemonth high of 559 per cent in December from 491 per cent in November mainly due to an uptick in food pricesMPC has been given the mandate to maintain annual inflation at 4 per cent until March 31 2026 with an upper tolerance of 6 per cent and a lower tolerance of 2 per centThe bimonthly policy comes against the backdrop of the Budget wherein a nominal gross GDP of 111 per cent has been estimated for 202223The government expects this growth to be fuelled by a massive capital spending programme outlined in the Budget with a view to crowdin private investment by reinvigorating economic activities and creating demandFinance Minister Nirmala Sitharaman raised capital expenditure capex by 354 per cent for the financial year 202223 to Rs 75 lakh crore to continue the public investmentled recovery of the pandemicbattered economy The capex in the current financial year is pegged at Rs 55 lakh croreThe spending on building multimodal logistics parks metro systems highways and trains is expected to create demand for the private sector as all the projects are to be implemented through contractorsWith regard to borrowing the government plans to borrow a record Rs 116 lakh crore from the market in 202223 to meet its expenditure requirement to prop up the economy This is nearly Rs 2 lakh crore higher than the current years Budget estimate of Rs 97 lakh croreEven the gross borrowing for the next financial year will be the highestever at Rs 1495000 crore as against Rs 1205500 crore in the Budget Estimate BE for 202122Fiscal deficit the excess of government expenditure over its revenues is estimated to come down to 64 per cent of GDP next year as against 69 per cent pegged for the current fiscal ending March 31This story has been sourced from a third party syndicated feed agencies Midday accepts no responsibility or liability for its dependability trustworthiness reliability and data of the text Midday managementmiddaycom reserves the sole right to alter delete or remove without notice the content in its absolute discretion for any reason whatsoever