The Reserve Bank of India (RBI) today slashed India’s growth projection for FY21 as the Covid-19 pandemic has disrupted economic activities.
“The GDP growth in 2020-21 is expected to remain in the negative territory with some pick up in second half,” said RBI governor Shaktikanta Das during a media address.
Further, he said that the economic activity in India was majorly battered due to nationwide lockdown in the last two months.
Economy was severely hit due the slow consumption in the private consumption. Das said that the Consumer durables production has come down to 33 percent in the March.
Electricity consumption has also dropped. Service sector has also contracted such as passenger and commercial vehicle sales, domestic air passenger traffic and foreign tourist arrivals have dropped significantly in March. However, agri sector remained the ray of hope, Das said.
The governor added that growth forecasting is very complicated now due to difficulty in data collection. “The end-May 2020 release of NSO on national income would provide greater clarity, enabling more specific projections of GDP growth in terms of both magnitude and direction,” RBI governor said.
The central bank of India gave directional rise in guidance, citing complications due to partial release of data by the NSO. “The Monetary Policy Committee assessed that inflation outlook is highly uncertain,” Das said.
“The MPC is of the view headline inflation will remain firm in first half of 2020 but will ease in second half,” says RBI governor.