The Governor of Reserve Bank of India (RBI) Shaktikanta Das, on Monday, said he was “surprised” by the slow rate of GDP in the country.
Speaking to the media in Mumbai, he said the decline in growth rate to 5% is a ‘surprise’ and the RBI is analysing ‘why exactly it happened’. Das told news channel CNN News18, “We (the RBI) predicted growth at 5.8 per cent. Nobody predicted less than 5.5 per cent. The number came as a surprise, worse than all predictions.”
The GDP sharply fell below the estimates given by the RBI’s monetary policy committee (MPC). The same MPC in August had reduced GDP growth to 6.9% from 7% with a downward bias.
“The numbers definitely look much worse because in the first quarter we had projected 5.8 % and I think almost everybody had projected not below 5.5 or so. But the number of 5 % is a surprise,’’ Das said while disclosing that research and analytical teams at the central bank were assessing as to how this variance occurred.
The economic growth rate has been falling consecutively from the last five quarters. It began from 8% to 7% to 6.6% to 5.8% and now to 5%. Global economic institutes including the international monetary fund (IMF) had predicted the growth rate to be over 7%. But, it was first the economic survey of India in July, that predicted a growth rate of 7%.
Asian Development Bank and many other private institutes also predicted similar rates but as the quarter progressed, the predictions were brought down consistently. But they were still far away from the turnout of 5%.
Now, the question arises that how could these top brass institutes predict such varying figures; of around 2% that accounts for trillions for an economy. The primary reason for this is, instead of an independent survey, they rely on government data which has been flagged several times.
The RBI Governor also said: “But again I am not trying to justify our slowdown through the prism of the global slowdown although it does impact… we have domestic issues also.”
On being asked when the economy will see a revival, Das said it is difficult to make an estimate as there are many things which were still playing out.
“I think with the right measures, things should improve. It’s a positive trend that the government is responding very fast and I don’t think we have heard the last from the government with regard to dealing with the current economic situation… My expectation is that it will be a continuous process and they would definitely be dealing with other challenges,” he said.