New Delhi | Jagran Business Desk: Reserve Bank of India Governor Shaktikanta Das on Friday addressed the media for the first time since the government announced a economic stimulus package of Rs 20 lakh crore for the economy hit by nation-wide lockdown due to the coronavirus pandemic.  

Addressing the media, while Shaktikanta Das announced new set of measures to trim the impact of coronavirus on the economy, he also said that the Gross Domestic Product (GDP) growth of the country will remain in the negative territory in the Financial Year 2020-21.

The RBI governor cited the COVID-19 crisis and the lockdowns for the impact on the economy and also said that uncertainty surrounding the pandemic continues to loom creating confusion among the businesses.  

However, the RBI governor expressed confidence of the gradual revival of economic activities and increase of demand in the second half of the FY2020-21.

India is seeing a collapse of demand. Private consumption has seen the biggest blow due to the Covid-19 outbreak, investment demand has halted. The government revenues have been impacted severely due to slowdown in economic activity," said the governor adding that the GDP growth in 2020-21 is expected to remain in the negative category with some pick up in second half. 

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Das also said the global economy is heading into recession. He also said inflation outlook is highly uncertain. "Domestic economic activity has been impacted severely by the two-month lockdown," he said and added that the top-six industrialised states that account for 60 per cent of India's industrial output are largely in red and orange zones.

He said high-frequency indicators point to collapse in demand, and there is a plunge in demand for electricity and petroleum productions. The biggest blow is to private consumption that accounts for 60 per cent of domestic demand, the governor said.

Das said the combined impact of demand compression and supply disruption will depress economic activity in the first half of the current fiscal.

"Assuming that economic activity gets restored in a phased manner in the second half of this year and taking in consideration favourable base effect, it is expected that combined fiscal, monetary and administrative measures currently undertaken by both the government and RBI create conditions for gradual revival of activities in the second half of 2020-21".

On inflation, Das said headline inflation may remain firm in the first half of the current financial year, and ease in the later part of the year. 

 

(With PTI Inputs)

Posted By: Talib Khan