A delay in Covid-19 vaccine distribution could impact GDP growth prospects in the next fiscal year and the Reserve Bank may cut policy rates by 50 basis points by June as inflation cools down, a foreign brokerage said on Wednesday.BofA Securities said it expects GDP growth at 9 per cent in 2021-22 if the vaccine distribution is done in the first half of the new fiscal year but may be just at 6 per cent if the distribution is deferred to the second half (October-March).
For the current financial year, it expects GDP to contract by 6.7% as against the government’s estimate of 7.7 % contraction. It can be noted that a slew of policy measures have been taken in the recent past including deep rate cuts, which had to be halted because of a surge in inflation to beyond the upper end of the range set for RBI. Speaking to reporters a day after official data suggested a sharp cool-down in the consumer price inflation to 4.6 per cent in December after being consistently above 6 per cent, its India economist Indranil Sen Gupta said BofA expects the RBI to cut rates by 50 basis points by June before it starts hiking them again.
