Economic upticks visible in May and June after the easing of coronavirus-related lockdown appear to have lost strength in July and August, mainly due to the reimposition of restrictions, the Reserve Bank of India said on Tuesday. That suggests that contraction in the country’s GDP or gross domestic product will “likely prolong into” the second quarter (July-September), the RBI said in its annual report for 2019-20.
With a nationwide lockdown and people mostly remaining indoors, the usage of cash increased abnormally, the RBI said, forcing it to undertake expansionary policy measures to ensure adequate liquidity in the system.
The RBI said it took a series of steps to counter the effects of COVID-19, which led to improvement in monetary transmission in the second half of 2019-20.
The central bank reiterated its Monetary Policy Committee’s move to bring down the repo rate – or the key interest rate – by a cumulative 250 basis points between February 2019 and June 2020, as growth-related risks got accentuated by COVID-19 amid inflationary concerns.
In its annual report, the RBI said the coronavirus pandemic has affected over 200 countries, bringing global economic activity to a near standstill.
The RBI’s total income increased 28.97 per cent to Rs 1,93,036 crore in the year 2019-20, compared to Rs 1,49,672 crore in the corresponding period a year ago. The Reserve Bank of India follows a July-June financial year.
