Targeting growth

RBI should not underestimate risks

The decision of the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) on Friday to leave the policy rate and stance unchanged was not a surprise. Equally predictable was the revision of its growth and inflation projections for the current year. The RBI now expects the Indian economy to expand by 9.5 per cent in the current fiscal year, against the earlier projection of 10.5 per cent. Although the impact of the second wave is likely to be less severe, it has significantly moderated activity on a sequential basis. The rate-setting committee expects the inflation rate to