The Reserve Bank of India (RBI) said on Friday that India’s GDP (GDP) growth would be negative in FY 2020-21, due to the economic activity being disrupted due to the corona virus outbreak. RBI Governor Shaktikanta Das said that the global economy is heading towards recession and inflation estimates are highly uncertain.
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“Two months of lockdown have severely affected domestic economic activity,” he said. He also added that the top six industrial states, which account for 60 per cent of India’s industrial production, are largely in the red or orange region. He said that there are signs of decline in demand and demand for electricity and petroleum products has come down. The governor said the biggest setback was in private consumption, which accounts for 60 per cent of domestic demand.
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Das said that economic activity would be affected in the first half of the current financial year due to a decrease in demand and supply disruption. He said that some improvement in economic activity is expected in the second half of 2020-21. “GDP growth is expected to be negative in 2020-21, although there will be some uptick in the second half of 2020-21,” he said.