RBI survey revises forecast for real GDP growth upwards for FY’21, FY’22

The Reserve Bank of India’s (RBI) latest Survey of Professional Forecasters (SPF) has revised the forecast for real gross domestic product (GDP) growth upwards for FY21 and FY22 vis-a-vis the last round of SPF.

The 67th round of SPF has projected a lower contraction of 8.5 per cent (median forecast) in real GDP in FY21 versus the 66th SPF round’s estimate of a 9.1 per cent contraction.

Real GDP is expected to recover next year (FY22), when it is expected to grow by 9.5 per cent against earlier projection of 8.2 per cent, as per the Survey.

The latest Survey has revised upwards the headline consumer price index (CPI) inflation projections for all the four quarters (Q3: October-December 2020 and Q4: January-March 2021; and Q1: April-June 2021 and Q2: July-September 2021) when compared with the previous survey round

Headline consumer price index (CPI) inflation is expected at 6.6 per cent (median forecast) in Q3:FY21 (versus 4.9 per cent projected earlier) and 5.4 per cent in Q4:FY21 (4.2 per cent).

CPI inflation projection for Q1:FY22 and Q2:FY22 has been revised upwards to 5 per cent (3.9 per cent) and 4.5 per cent (3.8 per cent), respectively.

Merchandise exports and imports (both in US Dollar terms) are projected to decline by 11.3 per cent (-14.7 per cent) and 23.2 per cent (-22.7 per cent), respectively, during 2020-21.

Merchandise exports and imports are projected to revert to growth terrain in 2021-22, growing by 12.5 per cent (10.2 per cent) and 23.2 per cent (20.6 per cent), respectively.

Current account is expected to record a surplus at 1.2 per cent (of GDP at current market prices) in 2020-21 (versus earlier forecast of 0.5 per cent surplus) before reverting to deficit at 0.4 per cent in 2021-22 (0.6 per cent deficit).

The Indian rupee is likely to remain range bound within ₹73.00-74.00 per US dollar till Q2:FY22 (earlier forecast:₹73.00-73.70)