The Reserve Bank of India governor Shaktikanta Das announced on Friday that the repo rate and reverse repo rate will remain unchanged. “The deep contraction of quarter one is behind us, the silver lining in visible,” the governor said while announcing the policy decisions of the Monetary Policy Committee. “The mood of the nation has shifted from fear to hope,” Das said. Commenting on the recovery of several sectors, the governor said it will be a three-speed recovery with individual sectors showing different trajectories.

“Real GDP in 2021 is likely to decline by 9.5 per cent but speedy rebound is anticipated,” Das added.

This is the first meeting of the newly formed Monetary Policy Committee which comprises Ashima Goyal who is currently a member of Indian Prime Minister Narendra Modi’s economic advisory council, Shashanka Bhide, a senior advisor at the National Council for Applied Economic Research – a New Delhi-based think, Jayanth Varma, a finance and accounting professor at the Indian Institute of Management, Ahmedabad, Michael Patra, deputy governor of RBI, Mridul Saggar, executive director of RBI and governor Shaktikanta Das.

What happened in the last meeting in August

1. The RBI kept the repo and reverse repo rate unchanged at 4 and 3.3 per cent, respectively.

2. The MPC said it was in favour of continuing with the ‘accommodative stance’ as long as it is necessary to revive growth and mitigate the impact of Covid-19 on the economy, while ensuring that inflation remains within the target going forward

3. The MPC noted that the economy was going through unprecedented stress in an ‘austere global environment’. “Extreme uncertainty characterises the outlook, which is heavily contingent upon the intensity, spread and duration of the pandemic – particularly the heightened risks associated with a second wave of infections – and the discovery of the vaccine,” the MPC had said

4. On the domestic front, economic activity had started to recover from the lows of April-May following the uneven re-opening of some parts of the country in June; however, surges of fresh infections have forced re-clamping of lockdowns in several cities and states. Consequently, several high frequency indicators have levelled off, it had noted.

5. The MPC said the agricultural sector emerged as a bright spot. Its prospects have strengthened on the back of good spatial and temporal progress of the south-west monsoon.