GDP growth in 2020-21 likely to remain in negative: RBI Governor

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"Given all these uncertainties, [economic] growth in 2020 to 2021 is estimated to remain in negative territory, with some pickup in growth impulses from [the second half of fiscal] 2020-21 onward".

Days after finance minister Nirmala Sitharaman announced a Rs 20 lakh crore package for "Aatmanirbhar Bharat", the Reserve Bank of India governor Shaktikanta Das will address a press meeting on Friday 10 AM, triggering speculations that the central bank could extend a moratorium on payment of all term loans. It is being speculated that with the extension of the lockdown till May 31, the moratorium will be extended for a period of another three months.

The governor said that considering the present situation due to the outbreak of COVID-19, this change has been made.

The two moves will effectively benefit the auto and bike owners who are now paying EMIs for their vehicles, as well as prospective buyers. It has also extended the moratorium on loan repayments by three more months.

This includes retail loans like those taken out for cars, home and education, along with corporate loans. Accordingly, the repayment schedule and all subsequent due dates, as also the tenor for such loans, were shifted across the board by three months. This makes it a six month moratorium.

"We received several representations from lending institutions and borrowers that the entire accumulated interest had to be paid back to the bank in one shot posing problems in cash flow management".

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RBI governor Shaktikanta Das says a facility of Rs 15,000 crore line of credit for 90 days for USA dollar swap facility will be provided to EXIM Bank.

Agriculture and allied activities have given a beacon of hope for the country, said the RBI governor.

"The combined impact of demand compression and supply disruption will depress economic activity in the first half of the year. The continued proactive measures taken by the RBI will help address these issues and revive the economy in the second-half of the year". "Nonetheless, downside risks to this assessment are significant and contingent upon the containment of the pandemic and quick phasing out of social distancing and lockdown", the Governor added.

He also added that inflation outlook is highly uncertain.

MPC is of the view that headline inflation in first half of 2020 will be stay intact but by Q3 and Q4 it may fall below the target of 4 percent, said the RBI governor. Private consumption has seen the biggest blow due to the Covid-19 outbreak, investment demand has halted.

"Home loan interest rates have already gone down substantially over the previous year, and are presently at an all-time low averaging between 7.15% to 7.8%", he added.

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