Mumbai, Jun 4 (IANS): The Reserve Bank of India has projected India's retail inflation for the current financial year at 5.1 percent.

For the first quarter, April-June, the retail inflation or the consumer price index (CPI) inflation has been estimated at 5.2 per cent, followed by 5.4 per cent, 4.7 per cent, and 5.3 in second, third and the fourth quarter, said the RBI Governor Shaktikanta Das in his statement post the Monetary Policy Committee's bi-monthly meeting.

He said that the favourable base effects that brought about the moderation in headline inflation by 1.2 percentage points in April, may persist through the first half of the year, conditioned by the progress of the monsoon and effective supply side interventions by the government.

"Upside risks to inflation emanate from persistence of the second wave and consequent restrictions on activity on a virtually pan-India basis," Das said.

He was of the view that in such a scenario, insulating prices of essential food items from supply side disruptions will necessitate active monitoring and preparedness for coordinated, calibrated and timely measures by both Centre and states to prevent emergence of supply chain bottlenecks and increase in retail margins.

The apex bank has lowered its growth projection for the current financial year to 9.5 per cent from the previous estimate of 10.5 per cent.

Amid the severe second wave of Covid-19 and the lockdowns across states, the RBI has sharply reduced the growth estimate for the April-June quarter to 18.5 per cent. The previous estimate for the period was 26.2 per cent.

The central bank has retained its key short-term lending rates along with the growth-oriented accommodative stance during the second monetary policy review of FY22 on Friday.

The Monetary Policy Committee (MPC) of the central bank voted to maintain the repo rate, or short-term lending rate, for commercial banks at 4 per cent.