Economy News

Budget announcement and RBI’s liquidity assurance to foster growth in upcoming quarters

The RBI kept its policy rates unchanged, assuring ample liquidity for the bond market and an ‘accommodative’ stance for future.

Moreover, the Indian economy entered an expansionary path witnessing a growth rate of 0.4 percent in Q3 FY21.

This is post the two consecutive quarters of contraction as per reports.

However, the statistics were in sync with the expected line as most of the high-frequency indicators forecasted economic recovery.

Currently, the repo rate stands at 4 per cent whereas the reverse repo rate is at 3.35 per cent.

Further, the cash reserve ratio (CRR) will scale back to 4 per cent in two phases.

From March 27, CRR will rise to 3.5 per cent from 3 per cent.

Meanwhile, the CRR will normalise back to 4 per cent from May 22.

The CRR reduced over one percentage points last year due to emergence of COVID crisis.

The plan was however to roll back in March this year.

Reserve Bank of India expected the Indian economy to grow at the rate of 0.1 percent in Q3 FY21.

Therefore, there was a consensus that India would exit from the technical recession in the third quarter.

The agriculture sector saw an impressive growth of 3.9 percent in the third quarter in terms of gross value added.

Performance of construction recorded a growth rate of 6.23 percent.

This accounted for the highest growth rate in the last eight quarters boosting the real estate sector.

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