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- India’s GDP growth will be negative in FY 2020-21 due to disrupted economic activity.
- The outlook for inflation is highly uncertain.
- Import duties need to be reviewed to bring prices down.
RBI Governor Shaktikanta Das said that the global economy is heading towards recession and inflation estimates are highly uncertain. “Two months of lockdown have severely affected domestic economic activity,” he said. He also added that the top six industrialized states, which account for 60 per cent of India’s industrial output.
Signs of fall in demand
He said that there are signs of decline in demand and demand for electricity and petroleum products has come down. The governor said the biggest setback was in private consumption, which accounts for 60 per cent of domestic demand. Das said that economic activity would be affected in the first half of the current financial year due to a decrease in demand and supply disruption.
Expected improvement in second half of 2020-21
He said that some improvement in economic activity is expected in the second half of 2020-21. He said, “GDP growth is expected to be negative in 2020-21, although there will be some momentum in the second half of 2020-21.”
Need to review import duty
Import duties need to be reviewed to bring prices down. According to him, the rate of inflation may fall below four per cent in the third or fourth quarter of the current financial year. Apart from this, Das said that the government’s revenue has been greatly affected due to the impact of economic activities during the epidemic.