Coronavirus hangs over the future like a ‘spectre’: RBI
In its Monetary Policy Report, the Reserve Bank of India has cautioned that Coronavirus, 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,” the central bank stated.
The study said that prior to this global health concern, the outlook for growth for 2020-21 was looking up. However, the global economy is expected to slump into recession in 2020 owing to the Covid-19 impact. This would also percolate to the Indian economy directly due to lockdowns, and through second round effects operating through global trade and growth. It also hinted at the likelihood of this lockdown being extended beyond 21 days.
The bank, also observed that though there has been a sharp fall in global crude prices which, if sustained, could improve the country’s terms of trade. The RBI said, the impact of COVID-19 on inflation is ambiguous, with a plausible decline in food prices likely to be offset by potential cost-push increases in prices of non-food items due to supply disruptions.