According to an annual report published by the RBI, on August 25, 2020 the projected growth rate of India stands at (-) 4.5 per cent for 2020-2021, whereas, the global growth rate has been projected between (-) 6.0 per cent and (-) 7.6 per cent. As per the report, the expected headline inflation will remain elevated in the current year but is likely to ease in the second half of the fiscal. It is difficult to accurately assess the economic impact of Covid-19 pandemic as the dynamics have still been evolving. The decline in economic activity had reached its trough in the April-June quarter of 2020-2021, but recovered thereafter at a gradual pace. However, the growth is likely to turn positive from January-March quarter, 2020-21.
RBI Suggestions
RBI has suggested for wide-ranging reforms to regain the losses due to the Covid-19 crisis. The central bank assumes that it will take quite some time to mend and regain the pandemic momentum. Therefore, the bank has suggested that the government must have a clear exit strategy with the credible consolidation milestones, and the timelines in reworking the path towards the fiscal rectitude in the future.
The government’s consumption spending has provided a great deal of relief, with the government’s revenue expenditure, having risen by 33.7 per cent in the first quarter of the year. The pandemic will be inflicting deep disfigurations on the world economy. The evolving intensity, duration, spread of Covid-19, and the discovery of the vaccine will greatly shape the future.
RBI’s Releases its Annual Report: 2020