Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday forecasted India’s growth rate at 7.4 per cent in 2020-21, saying that the country is expected to make a sharp turnaround and come on its pre-COVID-19, pre-slowdown track.
Quoting the International Monetary Fund’s projections amid the COVID-19 crisis, Das said, ‘For 2020-21, International Monetary Fund projects sizable reshaped recoveries, close to 9 percentage points for the global GDP. India is expected to post a sharp turnaround and resume its pre-COVID-19, pre-slowdown trajectory by growing at 7.4% in 2020-21.’
Das also said that the global economy is expected to slump into the worst recession since ‘The Great Depression’.
The RBI also slashed the reverse repo rate, the rate at which banks park their fund with the central bank, by 25 basis points to 3.75 per cent from an earlier 4% while keeping the repo rate constant.
On March 27,the RBI had slashed the repo rate to a 15-year-low of 4.40 per cent, the steepest cut since October 2004.
To improve liquidity of Small and Medium Enterprises, RBI Governor announced that the central bank has allocated Rs 50,000 crore to financial institutions such as NABARD, SIDBI and NHB.
He also said that banks will not be make any further dividend payout, in view of financial troubles arising from COVID-19.
These measures are aimed at easing the impact of the pandemic on the financial markets, RBI Governor Das said, adding that the central bank is monitoring the developments and is alert.
Furthermore, Das said that the 90-day NPA norm will not be implemented on moratorium granted on existing loans by banks.
Last month, RBI had asked all lending institutions to permit a three-month moratorium on EMI payments in order to ensure liquidity into the system as the economy struggles amid the outbreak of a pandemic.
Das also said that inflation is on a falling trajectory and could drop below the central bank’s 4 per cent target by the second half of this fiscal year. He said the consumer price index based retail inflation has plummeted by 170 bps from its peak in January 2020. The retail inflation for March fell to a four-month low of 5.91 per cent on cheaper food items.
RBI Governor said that economic activities have come to a standstill during lockdown.
He assured that the RBI is monitoring the situation developing out of COVID-19 outbreak and noted that the fall in exports in March at 34.6 per cent is worse than the global financial crisis of 2008-09.
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