Growth outlook to be hit drastically by COVID-19 outbreak

Prior to the deadly outbreak, which forced the nations across the globe to clamp complete lockdown, India had a positive growth outlook for 2020-21, the central bank said in its biannual monetary policy report.

It added that India would also suffer amid the global recession in the post-COVID-19 scenario, as projections indicate.

As it is, in the last three months of 2019, the Indian economy was growing at a pace slowest it had grown in the past six years and was projected to clock annual growth of 5 per cent which is lowest in the last 10 years.

India was beginning to show some signs of economic recovery, but now COVID-19  “hangs over the future, like a spectre," said RBI, according to reports.

RBI said the benefits accrued from the slump in petrol prices is unlikely to improve the economy owing to the lockdown, which has put all economic activities to a halt.

It added that the negative impact of the slowdown will penetrate to the domestic financial markets through finance and confidence channels which will further pull down the growth.

Further, the RBI also projected inflation for the year 2020-21 to be in the range of 3.6 per cent to 3.8 per cent owing to the easing food prices, good monsoon and sharp fall in the crude prices.

However, it said the food prices may be affected by the potential cost-push increases in prices of non-food items due to supply disruptions, and so the impact of COVID-19 on food prices is ambiguous.