The coronavirus pandemic followed by the complete lockdown has sharply altered the outlook for India’s economic growth, the Reserve Bank of India said in its Monetary Policy Report on Thursday, emphasising the outbreak of COVID-19 and expected contraction in global outlook would weigh heavily on the growth outlook.

The central bank said, “prior to the outbreak, the outlook for growth for 2020-21 was looking up.”

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The RBI noted that the bumper rabi harvest and higher food prices during 2019-20 provided conducive conditions for the strengthening of rural demand, the transmission of past reductions in the policy rate to bank lending rates has been improving, and reductions in the tax rates and measures to boost rural and infrastructure spending were directed at boosting domestic demand more generally.

“The COVID-19 pandemic has drastically altered this outlook,” the report said and added the global economy is expected to slump into recession in 2020, as post-COVID projections indicate.

Country’s economic growth slowed sharply in more than six years in the last three months of 2019 and was projected to achieve annual growth of five per cent which would be lowest in over a decade.

The RBI further said the sharp reduction in international crude oil prices, if sustained, could improve the country’s terms of trade, but the gain from this channel is not expected to offset the drag from the shutdown and loss of external demand.

“COVID-19, the accompanying lockdowns and the expected contraction in global output in 2020 weigh heavily on the growth outlook. The actual outturn would depend upon the speed with which the outbreak is contained and economic activity returns to normalcy.

“Significant monetary and liquidity measures taken by the RBI and fiscal measures by the government would mitigate the adverse impact on domestic demand and help spur economic activity once normalcy is restored,” it said.

The federal bank said that it was difficult to make growth projections at this point of time as the conditions remained highly uncertain.

The report further said it did not provide any growth forecast for GDP, as the situation is highly fluid and “incoming data produce shifts in the outlook for growth on a daily basis.”

India has reported 5,000 active coronavirus cases and 166 deaths as of on Thursday morning.