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RBI said, “The actual outturn would depend upon the speed with which the outbreak is contained and economic activity returns to normalcy,”
Before Covid-19, the outlook for 2020-21 growth was looking up. Reductions in the GST rates, corporation tax rate cuts, and measures to boost rural and infrastructure spending were to have a positive impact at boosting domestic demand. But due to the coronavirus the economy is likely to collapse. The sharp reduction in international crude oil prices, if sustained, could improve the country’s terms of trade, but the gain is not expected to compensate the fall from the shutdown.
“While efforts are being mounted on a war footing to arrest its spread, COVID-19 would impact economic activity in India directly through domestic lockdown. Second round effects would operate through a severe slowdown in global trade and growth,” the RBI said.