On Friday, at the monetary policy committee meeting announcement, the Reserve Bank of India (RBI) said that it sees the gross domestic product (GDP) for the financial year 2020-21 contracting at 9.5 percent with chances of a strong rebound.
RBI Governor Shaktikanta Das said that modest recovery seen in the first half of the current financial year could strengthen further in the second half as economic activity gains traction in the December-ended quarter. He added that GDP growth may break contraction and enter a positive zone by the fourth quarter.
Das also announced a range of measures for the economy which includes 24x7 RTGS from December, rationalisation of risk weightage on home loans, Ways & Means Advance (WMA) limit for the Centre,on-tap TLTRO for Rs 1 trillion at 4% till March 2021, OMO worth Rs 20,000 crore and special and outright bond purchases by RBI.
For the first quarter that ended on 30 June, India's GDP contracted by a record 23.9 percent, the sharpest fall since the quarterly figures started being published in 1996. The contraction reflects the severe impact of the COVID-19, as most of the April-June quarter was spent in a nationwide lockdown to curb the spread of the virus. Economists have projected the effect of the sharp contraction to contribute to an annual contraction this financial year.