India / Sensex hits 45,000 for first time as RBI upgrades GDP forecast to -7.5%

Mumbai: The Sensex on Friday skyrocketed past 45,000-mark for the first time in history after the Reserve Bank of India (RBI) projected the GDP growth at -7.5 per cent for the next fiscal year.

The central bank had in October projected that the real GDP growth will contract by 9.5 per cent. However, on Friday, it said that the second half of 2020-21 is expected "show some positive growth".

It also said that the GDP will expand at 0.1 per cent at third quarter while the last quarter is likely to see an expansion of 0.7 per cent.

The Indian economy had shrunk by 9.3 per cent in the first quarter of 2020-21 because of the coronavirus-induced lockdown. However, the second quarter of the current financial year saw an improvement and the contraction reduced to 7.5 per cent.Repo is the rate at which RBI lends funds to commercial banks when needed. It is a tool that the central bank uses to control inflation. Reverse repo rate is the rate at which the RBI borrows from banks.

It was last revised by the central bank on May 22 this year after it slashed it by 115 basis points to support growth amid the coronavirus pandemic.

Assuring that it will continue its accommodative stance "for as long as necessary", the RBI on Friday said that the repo rate will stay unchanged at 4 per cent while the reverse repo rate will stay at 3.35 per cent.

"Monetary Policy Committee (MPC) was of the view that inflation is likely to remain elevated with some relief in the winter months from prices of perishables and bumper Kharif arrivals," news agency ANI quoted RBI Governor Shaktikanta Das as saying.