India not immune to economic impact of COVID-19: RBI Governor
Reserve Bank of India (RBI) Governor Shaktikanta Das addressed a press conference at the central bank's headquarters in Mumbai on Monday. Das said that the negative impacts of the novel coronavirus disease (COVID-19) have been seen in certain sectors worldwide and India is not immune to such effects. However, contrary to expectations, the RBI did not announce a repo rate cut, currently at 5.15%.
'COVID-19 could impact India's economic activity directly through trade channels'
"Tentative estimates of the consequent loss of global growth are currently placed in the range of 0.4-1.5%," Das said in the context of the COVID-19 outbreak, adding, "India is not immune to this pandemic." He said, "COVID-19 could impact economic activity in India directly through trade channels, especially in electronics, drugs, pharmaceuticals, etc., in which the exposure to China is relatively high."
RBI to review COVID-19's impact in upcoming policy meet
Das said the simultaneous effects of global and domestic slowdown due to the outbreak could further stall India's economic growth. He said the RBI will take a "clearer view" of how great this impact would be in the upcoming Monetary Policy Committee (MPC) meeting. Globally, Das said, the outbreak has negatively impacted the tourism, hospitality, and airline industries, along with domestic trade and transfer.
'India relatively insulated from global value chain'
Das said, "As far as the Indian economy is concerned, India is relatively insulated from the global value chain. To that extent, the impact on India will be less." He cautioned, "But India is integrated into the global economy, so there will be some impact. We are evaluating and we will announce it when we hold a policy meeting."
Das hinted at rate cut in April MPC meet
The RBI hinted at a repo rate cut in the April 3 MPC meeting. Many had speculated that an emergency inter-meeting interest rate cut may be announced today as 43 other central banks had done. The RBI, however, announced another round of $2 billion dollar-rupee sell-buy swap on March 23, and a Long-term Repo Operations which may lead to banks slashing lending rates.
Yes Bank moratorium to be lifted on March 18: Das
Das assured the depositors of crisis-hit Yes Bank that their money is safe. The bank was placed under a 30-day moratorium earlier this month. The RBI had proposed a reconstruction scheme for Yes Bank and the moratorium will now be lifted on March 18 at 6 pm. Depositors can access full banking services from Wednesday evening. Das assured intervention with additional liquidity if required.
