RBI projects country's growth rate at (-) 4.5 per cent for 2020-21

The Reserve Bank has projected India's growth rate at (-) 4.5 percent for 2020-21. In its annual report released yesterday, RBI  projected global growth rate between (-) 6.0 per cent and (-) 7.6 per cent. The report says that expected headline inflation will remain elevated in the current quarter, but likely to ease in the second half of the fiscal. 

 

Stating that it is difficult to accurately assess the economic impact of COVID-19 pandemic as the dynamics are still evolving, RBI said it looks like the decline in economic activity reaches its trough in April-June quarter of 2020-21 and recovers thereafter, albeit at a gradual pace. It adds that the growth is likely to turn positive from January-March quarter 2020-21.

 

In its report, RBI has asked for wide-ranging reforms to regain losses due to COVID-19



crisis adding that it will take quite some time to mend and regain the pre-COVID-19 momentum. Noting that meeting the fiscal targets budgeted in 2020-21 has become even more challenging due to COVID-19, RBI has said that the government must have a clear exit strategy with credible consolidation milestones and timelines in reworking the path towards fiscal rectitude in the coming years.

 

The report also notes that government consumption spending has provided a measure of relief, with the central government's revenue expenditure, having risen by 33.7 per cent in the first quarter. It stressed that the pandemic will inflict deep disfigurations on the world economy adding that the future is heavily contingent upon the evolving intensity, spread and duration of COVID-19 and the discovery of the elusive vaccine.