India's economy will shrink this year for the first time since 1979

Covid response SA

With the lockdown being extended till May 31, the Reserve Bank of India has extended the moratorium of installments of term loans by another three months till August 31, 2020.

Shaktikanta Das addressed a press conference announcing measures to ease the financial stress caused by the COVID-19 pandemic.

Bank of Baroda's chief economist Sameer Narang said he expects the GDP to contract by 4.7 percent in FY21, and headline inflation at 3.5 percent, which leaves the room for the RBI to deliver another 25 bps reduction in policy rate.

Domestic rating agency CRISIL said Extension of moratorium by another three months will be beneficial from a borrower's perspective, particularly for those whose cash flows have been impacted on account of the extended lockdown and expectation of only a phased resumption of economic activity. "Job losses are also expected to be widespread", the MPC statement said.

The World Bank and the International Monetary Fund earlier projected disappointing growth for India, saying that the nation's GDP could fall to between 1.5 percent and 1.9 percent this fiscal year, which began in April and will end in March 2021.

Banks arrive at the final lending rate after adding a profit margin to the repo rate to cover their costs.

Among other regulatory measures, the Indian central bank hiked the group exposure limit for banks to 30 per cent from 25 per cent.

This takes the bank's total repo rate cuts this year to 275 basis points or 2.75%, as it slashes rates in the face of Covid-19 economic fallout.

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Repo rate reduced to 4%, moratorium on loans extended to Aug 31: RBI Governor

India's economy won't grow at all this year, despite an anticipated rebound in activity in the coming months, the head of the country's central bank said Friday.

Analysts say the central bank appears deeply concerned about India's growth prospects. In the light of the COVID-19 pandemic and the consequent stress on these state government finances, Shaktikanta Das said that RBI has made a decision to relax the rules governing withdrawal from the CSF, while at the same time ensuring that depletion of the fund balance is done prudently.

Taking stock of the economic scenario of the country, the RBI governor also said GDP growth in 20-21 is estimated to remain in the negative territory with some pickup in growth impulses in the second half of 2021.

"The impact of coronavirus is turning out to be more than expected".

SARB cuts rates by 50 basis points as expected and pred.

RBI Governor says India seeing a collapse of demand; electricity, dip in petroleum product consumption; fall in private consumption.

Das said the combined impact of demand compression and supply disruption will depress economic activity in the first half of the April 2020 to March 2021 financial year. "India would need more measures on a continous basis on both fiscal and monetary front to revive the economy from the current phase of negative growth".

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