The Reserve Bank of India (RBI) on Friday retained the GDP forecast for the current FY at 9.5 percent and flagged global semiconductor shortages, elevated commodity prices, and potential global financial market volatility as downside risks to economic growth.

In his address after the 3-day meeting of the rate-setting panel, the Reserve banks Governor Shaktikanta Das said the recovery in aggregate demand gathered pace in Aug-Sept, and it is reflected in high-frequency indicators, like railway freight traffic; cement production, port cargo,  electricity demand, e-way bills, GST and toll collections. 'The ebbing of infections has been supporting private consumption. He said the pent-up demand and the festival season should give further fillip to urban demand in the second half of the financial year.

Also, the improved level in reservoirs and early announcement of the minimum support prices for Rabi crops has boosted the prospects for rabi production. The support to aggregate demand from government consumption is also gathering pace.

The rural demand is expected to get impetus from the continued resilience of the agricultural sector and record production of Kharif food grains in 2021-22 as per the first advance estimates.

The RBI Governor also said that critical support to aggregate demand came from exports, which remained more than USD 30 billion for the seventh consecutive month in September 2021, reflecting strong global demand and policy support. Further, recovery in the services sector is also gaining traction.

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