Reserve Bank of India (RBI) on Friday announced a fresh set of measures within the wake of the coronavirus crisis within the country and shared details about the country’s growth outlook.
In a news conference held this morning, RBI Governor Shaktikanta Das said the country’s growth has been impacted severely by the prolonged lockdown thanks to rising Covid-19 infections, adding that GDP growth could also be negative for the whole year with mild recover within the last half .
Das also said members of the Monetary Policy Committee (MPC) decided to further reduce the repo rate to 4 per cent after 40 basis point cut. The repo rate before today's cut was 4.4 per cent.
He also announced several other measures to ease pressure on citizens and corporations , who are hit hard by the lockdown. Here may be a summary of Das’s news conference in 10 points:
1) The Federal Reserve Bank of India (RBI) has cut repo rate by 40 basis points to 4 per cent because it aims to lower lending rates for cash-strapped borrowers. The reduced reverse repo rate now stands at 3.35 per cent.
2) The central bank’s MPC voted 5:1 in favour of slashing the repo rate by 40 basis points while maintaining an accommodative stance. Das said the RBI would keep supporting the economy till it recovers.
3) Das spoke at length about the impact of the deadly virus on the worldwide economy, which is facing the worst recession since the good Depression of the 1930s. India, too, is predicted to record negative growth in 2021, said the RBI governor.
4) He, however, said that there's alittle “ray of hope” for India within the sort of good yields during the Rabi harvesting season. The prediction of a traditional monsoon in India also provides fresh hope of recovery.
5) He then spoke about how private consumption has been hit hard thanks to the coronavirus pandemic which investment demand has halted. He also added that government revenues are severely impacted by the pandemic. it's going to be noted that that the govt recently announced a Rs 20 lakh crore economic package to revive the cash-starved economy.
6) Das also shared some key data to showcase how Covid-19 has impacted the Indian economy. He said industrial production in India shrank by on the brink of 17 per cent in March while manufacturing activity contracted by 21 per cent. He also said that the output of core industries has contracted by 6.5 per cent.
7) Another good sign for the Indian economy, as mentioned by Governor Das, is that the incontrovertible fact that foreign reserves have increased and India has $487 in exchange reserves as of May 15.
8) Shaktikanta Das that announced broad relief measures packed in four categories which are aimed toward improving domestic stock exchange performance, supporting exports and imports, giving relief on debt servicing and better access to capital and also to ease financial constraints faced by state governments.
9) RBI has also announced a three-month extension of the moratorium on term loans till August 31. Das said the choice was taken on account of continued disruption caused by Covid-19 lockdown to assist citizens and corporations .
10) Lastly, the RBI governor assured that the financial institution will keep supporting the Indian economy throughout the recovery process. It said even more policy measures are going to be introduced if the inflation outlook is back within their target zone of 4 per cent by the third quarter of the present fiscal year .