The Reserve Bank of India (RBI) on Thursday stated that the nationwide lockdown and the global slowdown are adversely impacting the economic activity and COVID-19 hangs over the future like a spectre.
RBI in its Monetary Policy Report observed that the ongoing lockdown and expected contradiction in global outlook would weigh heavily on the growth outlook.
“The actual out turn would depend upon the speed with which the outbreak is contained and economic activity returns to normalcy,” it said.
RBI further said the coronavirus would impact the economic activity in India directly due to the lockdowns. However, it expressed hope that recent monetary and fiscal measures would mitigate the impact of COVID-19 on domestic demand and spur growth once the normalcy is restored.
The report further said the impact on COVID-19 on inflation is ambiguous and there is a possible decline in food prices likely to be offset by potential cost-push increases in prices of non-food items due to the supply disruptions.
In its report, the RBI said that prior to the outbreak of the virus, the growth for 2020-21 was looking up.
The report further said, “The COVID-19 pandemic has drastically altered this outlook.”
The financial markets across the world are expecting extreme volatility; global commodity prices, have declined sharply.
However, the report did not provide any forecast for GDP by saying that the situation is highly fluid and incoming data produce shifts in the outlook for growth on a daily basis.
In a separate development, the Managing Director of International Monetary Fund, Kristalina Georgieva, said the Coronavirus pandemic will trigger the worst economic fallout in 2020 since the 1930s Great Depression, with only a partial recovery seen in 2021.
“Just three months ago, we expected positive per capita income growth in over 160 of our member countries in 2020,” she said.
“Today, that number has been turned on its head: we now project that over 170 countries will experience negative per capita income growth this year,” she further added.
The number of positive cases in India has crossed the 5000 mark with 169 deaths reported due to the deadly virus.
(With inputs from PTI)