Das said that the GDP growth in India in 2020-21 is estimated to remain in the negative territory.
"India is seeing a collapse of demand. Private consumption has seen the biggest blow due to the Covid-19 outbreak, investment demand has halted. The government revenues have been impacted severely due to slowdown in economic activity," said the governor.
However, he said that the combination of fiscal, monetary, and administrative actions will create conditions for the revival of the economy in the second half of FY21.
India's benchmark 10-year bond yield dropped as much as 18 basis points to 5.85% immediately after the rate cut was announed.
Moratorium on payment of loans
The RBI extended the moratorium on payment of loans by another three months till August to provide much-needed relief to borrowers whose income has been hit due to the coronavirus crisis.
In March, the central bank had allowed a three-month moratorium on payment of all term loans due between March 1, 2020, and May 31, 2020. Accordingly, the repayment schedule and all subsequent due dates, as also the tenor for such loans, were shifted across the board by three months.
As a result of this moratorium, individuals' EMI repayments of loans taken were not deducted from their bank accounts, providing much-needed liquidity. The EMI payments will restart only once the moratorium time period expires on August 31.
The moratorium on interest on working capital was also extended by three months. Interest accumulated for the six-month moratorium period can be converted into a term loan, Das said. Further, bank exposure to corporates has been raised to 30 per cent of the group's net worth from the current limit of 25 per cent, a move that will allow lenders to give larger loans to companies.
GDP growth in 2020-21 likely to in negative
India's gross domestic product (GDP)
growth will be in negative territory in 2020-21 as the outbreak of coronavirus has disrupted economic activities. Das said the combined impact of demand compression and supply disruption will depress economic activity in the first half of the current fiscal.
"Assuming that economic activity gets restored in a phased manner in the second half of this year and taking in consideration favourable base effect, it is expected that combined fiscal, monetary and administrative measures currently undertaken by both the government and RBI create conditions for gradual revival of activities in the second half of 2020-21.
"GDP growth in 2020-21 is estimated to remain in the negative territory with some pick up in growth impulses in the second half of 2020-21 onwards," he said.
Inflation outlook highly uncertain
Das said the inflation outlook is highly uncertain due to the outbreak of the COVID-19 pandemic and expressed concern over elevated prices of pulses. He also said there is a need to review import duties to moderate prices.
Headline inflation may remain firm in the first half of the year and may ease in second half. Inflation may fall below 4 per cent in the third or fourth quarter of the current fiscal, according to the Governor. Further, Das said government revenues have been impacted severely due to the slowdown in economic activity amid the pandemic.