According to the RBI Monetary Policy 2020, the Coronavirus is forming an obstacle in India’s economic revival path. The prior check depicted the growth of the economy. However, after the Coronavirus outbreak, it showed a contrary picture that reflects the economy striding into a recession.
Coronavirus Pandemic Affect
Following the pandemic, the reports suggest that the global economy will decline steeply. Further, RBI’s monetary policy report repudiated to comment on any GDP projection growth. As the condition was highly uncertain following the deadly contaminant outbreak. Additionally, it strives to investigate the intensity, blowout, and extent of the pandemic. Subsequently, analysis of the extremely fluid situation will help understand its effect on the economy of the nation.
Coronavirus Pandemic Affect on Inflation
Subsequently, since the lockdown, the demand for fuels has reduced. Further, experts estimate an even steeper downfall as the lockdown halt the economic activity of the nation. Accordingly, the inflation ease was approximately 5.93% in March against 6.58% in February. Nonetheless, the range is closer to the RBI’s target range of 2-6%, while conjectures in the poll lie around 3.9-7%. Further, experts suspect a fall in food price costs.
The fall in inflation was mainly due to the implementation of social distancing. Further, the abrupt halt in transport, communication, and functioning of the social services. Consequently, to keep a check on inflation, RBI may cut cost. However, several economists suggest that inflation isn’t the current concern of RBI while handling the Coronavirus pandemic is the matter at hand.
RBI’s Monetary Policy Report and Relief Measures
India faces the lowest growth projectile in over a decade of under 5%, according to the Report from the central bank. Following the outbreak, in an emergency move, the RBI cut the debit rate by 75 basis points. Also, RBI implements several relief measures subsequently after the pandemic effectively hits the economy. Similarly, they induced restoring actions to input rupee and dollar liquidity in the markets.