The Reserve Bank of India (RBI) has also finally admitted that the country’s gross domestic product (GDP) growth will be negative during the financial year 2020-21, i.e., it will decline. Many rating agencies have already made such assessments because of corona and lockdown, but the Reserve Bank had been avoiding offering any estimates on GDP.
What the Reserve Bank said
After a meeting of the Monetary Policy Committee (MPC) to discuss the situation arising out of corona, RBI Governor Shaktikanta Das on Friday made a press conference and made several announcements. “India’s GDP will decline in FY221 and may remain negative,” he said.
The crisis caused by corona
In view of the corona crisis, the Modi government had announced an economic package of about Rs 20 lakh crore. Finance Minister Nirmala Sitharaman has already placed the details of the package before the country. Now, Reserve Bank of India (RBI) Governor Shaktikanta Das has announced a repo rate cut. The RBI’s repo rate has come down from 4.40 percent to 4 percent after the cut. An additional 3 months is given on grant of loan variety. Meaning that if you do not give your loan EMI for the next 3 months, the bank will not put pressure.
Moody’s had made these estimates
The country’s economic crisis is on the rise during the Corona period. Rating agencies across the world have expressed concern over India’s economic growth. Credit rating agency Moody’s Investors had recently expressed fears that India’s economic growth may remain at zero in 2020-21.
In its new forecast, the agency said India’s gross domestic product (GDP) growth may remain nil in the financial year 2020-21. This means that the country’s GDP position will remain flat this fiscal. The agency, however, projected the growth rate to reach 6.6 percent in FY 2021-22. Moody’s had lowered the GDP growth forecast to 0.2 percent in the calendar year 2020 at the end of last month.
Amidst the lockdown, the government announced a Rs 1.70 lakh crore relief package in March. The agency said these measures could help reduce the impact and duration of India’s economic moderation.