The Reserve Bank of India has projected the country’s growth rate at (-) 4.5 percent for 2020-2021. In an annual report released by the bank on August 25, 2020, the global growth rate has been projected between (-) 6.0 percent and (-) 7.6 percent.
The report also informed that the expected headline inflation will remain elevated in the current year but is likely to ease in the second half of the fiscal. While mentioning that it is difficult to accurately assess the economic impact of COVID-19 pandemic as the dynamics have still been evolving.
RBI’s report on India’s economic growth:
Reserve Bank of India in its report mentioned that it looks like that the decline in economic activity had reached its trough in the April-June quarter of 2020-2021 and has recovered thereafter at a gradual pace. The report mentions that the growth is likely to turn positive from January-March quarter 2020-21.
Suggestions in the report:
RBI in its report has asked for the wide-ranging reforms to regain the losses due to the COVID-19 crisis while adding that it will also take quite some time to mend and regain the pandemic momentum.
The report while noting that meeting the fiscal targets budgeted in 2020-21 has become even more challenging due to the COVID-19 pandemic, 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 coming years.
Relief through government spending:
The report by RBI highlighted that the government’s consumption spending has provided a great deal of relief, with the government’s revenue expenditure, having risen by 33.7% in the first quarter of the year.
The report also underlined that the COVID-19 pandemic will be inflicting deep disfigurations on the world economy while adding that the future has been heavily contingent upon the evolving intensity, duration, and spread of COVID-19 and the discovery of the vaccine.
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