(Pooja Pal; Intern Journalist): On May 22nd, 2020, the Reserve Bank of India (RBI) alleged that India’s GDP for FY21 is favorable to fall on the negative side of the graph as several economic activities were at a halt due to the COVID-19 pandemic.
While addressing on television, RBI Governor Shaktikanta Das alleged that the worldwide economy is leading into recession and high uncertainty of inflation outlook.
“Domestic economic activity has been affected a lot by the 2-month lockdown,” he said and further stated that the top 6 industrialized states that account for 60% of India’s industrial output are largely in red and orange zones.
He further alleged that demand for electricity and petroleum productions has declined sharply. Private consumption has been the most affected as it accounts for 60% of domestic demand.
“Assumption being made that economic activity gets revived in a phased manner in the 2nd half of this year and considering a favorable base effect, it is expected that combined fiscal, monetary and administrative measures at present undertaken by both the government and RBI forms conditions for a gradual revival of activities in the 2nd half of 2020-21.”
GDP for FY21 is likely to fall but is expected to grow in mid-2020-21 onwards.