COVID-19 hangs over the future like a ghost: RBI

The RBI today said the Covid-19 pandemic is hanging over the future like a 'spectre' and it will adversely affect the country’s economy due to a domestic lockdown and global recession. The Bank also warned of dire consequences if the duration of the global pandemic extends longer.

New Delhi: The Reserve Bank Thursday said that the COVID-19 virus that has killed more than 90,000 people and infected over 1.5 million people across the globe hangs over the future like a ghost.

“The sheer scale and speed of the unfolding human tragedy is overwhelming,” said the RBI in its Monetary Policy Committee report released today.

The novel coronavirus or SARS-CoV-2, a new strain of deadly SARS virus, which was first detected in China in December last year has spread to 200 countries in just three months.

It has forced the governments to impose lockdowns across several countries in Asia, Europe and America. Authorities have shut down public transport and other public places like hotels, clubs, shopping centres, educational institutions and production centres to prevent the spread of this highly contagious virus, bringing the economic activity to a grinding halt in several parts of the world.

In India, Prime Minister Narendra Modi has announced a 21-day lockdown ending on April 14. But the government is likely to extend the lockdown as new cases are reported from different parts of the country every day. The final decision to extend the lockdown will be taken by the Centre following a video conference of Prime Minister Narendra Modi with state chief ministers on Saturday (April 11).

The COVID-19 virus has so far killed 169 people in the country and infected more than 5,200 people, forcing the government to direct its entire energy in containing the community spread of the virus.

RBI said the disruption of economic activity in a wide swathe of affected countries is set to intensify due to massive dislocations in global production and supply chains, and also in trade and tourism sectors.

The outbreak of this highly infectious virus has resulted in the total shutdown of passenger trains and flights, hotels and restaurants in the country as people have been forced to stay indoors to avoid the infection.

The Central Bank predicted that the actual recovery would depend upon the speed with which the outbreak is contained and economic activity returns to normalcy.

“The slowdown could be more protracted in dire scenarios in which the duration of COVID-19 extends longer,” warned the RBI in its report.

COVID-19 will impact Indian economy due to lockdowns

In its report, the RBI said the impact of COVID-19 on Indian economy will be directly linked to the complete lockdown imposed by the Union and state governments.

“Second round effects would operate through a severe slowdown in global trade and growth. More immediately, spillovers are being transmitted through finance and confidence channels to domestic financial markets,” said the RBI.

RBI refused to predict GDP growth rate

In its report, the RBI refused to give its forecast for GDP growth for FY 2020-21 due to extremely fluid and uncertain situation.

RBI said the highly fluid situation has been causing the Bank to change its growth outlook everyday therefore the Bank would not provide its forecast for the country’s real GDP growth.

(Article by Krishnanand Tripathi)