Announcing fresh measures to mitigate the impact of COVID-19, the Reserve Bank of India (RBI) on Friday decided to slash the repo rate from 4.4 per cent to 4 per cent. The RBI also reduced the reverse repo rate to 3.35 per cent.

RBI Governor Shaktikanta Das said that the central bank would continue to support the economy till required.

Relief On Loan Payments

The central bank has also extended the moratorium on loan repayments by three more months till August to grant relief to borrowers whose income has been majorly affected due to the COVID-19 crisis.

The central bank, in March, had permitted a three-month moratorium on payment of all term loans due between March 1, 2020, and May 31, 2020. As a result, EMI repayments of loans taken were not deducted from their bank accounts. The EMI payments will restart once the moratorium time period expires on August 31.

Impact Of COVID-19 On Economy

Addressing a press conference, Das said the global economy is on the verge of falling into recession on the back of the COVID-19 pandemic. He said however a small ray of hope for India is from the good yield in the Rabi season and a normal monsoon predicted by the India Meteorological Department (IMD).

‘Private consumption in India has seen biggest blow due to COVID-19 outbreak and the investment demand has halted,’ Das said. He added that due to the pandemic, government revenues have been severely impacted.

Das also said that India’s GDP growth in 2020-21 is likely to be in the negative. A combination of fiscal, monetary, and administrative actions will create conditions for the revival of the economy in the second half of FY21, he said.

‘India is seeing a collapse of demand. There is a dip in electricity and petroleum product consumption, along with fall in private consumption,’ RBI Governor said.

Das also expressed concerns over increased prices of pulses and said that there is an urgent need to review import duties to moderate prices. ‘Headline inflation may remain firm in the first half of the year and may ease in second half. Inflation may fall below 4 per cent in the third or fourth quarter of the current fiscal,’ he said.

Also Read: RBI Projects India’s Growth At 7.4% In 2020-21, Announces Slew Of Measures Amid COVID-19 Crisis