As global economy heads into recession, India’s GDP growth in 2020-21 is expected to remain in the negative with some pick up in second half, Reserve Bank of India Governor Shaktikanta Das said on Friday.
“We expect normalcy to return in the second half of the year as more relaxations are announced. Much will depend on how the Covid-19 curve flattens,” Das said.
Das said the RBI had cut the repo rate by 40 basis points from 4.4 % to 4% while the reverse repo rate was reduced to 3.35%.
Das said the central bank’s Monetary Policy Committee (MPC) had voted to maintain its “accommodative” stance.
India is seeing collapse of demand, dip in petroleum product consumption and fall in private consumption, the RBI Governor.
The country went into the coronavirus pandemic amid falling growth and a sharp contraction in demand - both of which have been worsened by the pandemic.
Das said industrial production shrank by close to 17% in March with manufacturing activity down by 21%. Output of core industries contracted by 6.5%.
“India’s foreign exchange reserves have increased by 9.2 billion during 2020-21 from 1st April onwards. So far, up to May 15, foreign exchange reserves stand at 487 billion US dollars,” the RBI Governor said.
(This article will be updated with more details from the RBI press conference)