The Gross Domestic Product (GDP) growth will be in the negative territory in 2020-21, Reserve Bank of India (RBI) Governor Shaktikanta Das said in his address to the media.
The RBI Governor said there will be a gradual
revival in economic activity by second half of FY-2021
The
Reserve Bank of India (RBI) expects the country's GDP or gross domestic product
to contract in the current financial year, Governor Shaktikanta Das said on
Friday, as he announced a reduction in the repo rate by 40 basis points to 4
per cent. GDP growth will be in the negative territory in 2020-21, Mr Das said
in his first address to the media after the government unveiled a fiscal and
monetary stimulus worth Rs 20.97 lakh crore to support the economy's fight
against the coronavirus pandemic and the weeks-long lockdown. Friday's moves
were aimed at countering the economic fallout from an ongoing nationwide
lockdown to contain the spread of the coronavirus pandemic.
Here are 10 things to know:
1. The COVID-19 crisis and the
ongoing nationwide lockdown, with few exceptions, have impacted the economy and
uncertainty surrounding the pandemic continues to loom, the RBI Governor said.
2.
"The outbreak of
coronavirus has disrupted economic activities," he said.
3.
Mr Das however expressed
confidence of a gradual revival in economic activity and demand by the second
half of the current financial year, which ends in March next year.
4.
"GDP growth in 2020-21
is estimated to remain in the negative territory with some pick up in growth
impulses in the second half of 2020-21 onwards," he said.
5.
The RBI Governor said the
combination of fiscal, monetary and administrative measures being currently
undertaken by both the government and RBI will create conditions for a gradual
revival of economic activities in the second half of 2020-21.
6.
The surprise moves by the
RBI on key interest rates and the extension of a loan moratorium by three
months - which allows banks to defer loan payments from borrowers - came days
after the government detailed monetary and fiscal support worth a total Rs 21
lakh crore.
7.
The RBI chief said the
global economy is heading into recession, and the domestic inflation outlook is
"highly uncertain". Headline inflation "may remain
firm" in the first half of 2020-21 and ease in the remaining part of the
financial year.
8.
"Domestic economic
activity has been impacted severely by the two-month lockdown," he said.
He also highlighted that the top-six industrialised states that account for 60
per cent of the country's industrial output are largely in the red and orange
zones.
9.
High-frequency indicators
point to collapse in demand, and there is a plunge in demand for electricity
and petroleum productions. The biggest blow is to private consumption,
which accounts for 60 per cent of domestic demand, the RBI Governor said.
10. The combined impact of
demand compression and supply disruption will depress economic activity in the
first half of the current fiscal year.
Tags
Economy