Mumbai,/March,16 :The coronavirus pandemic would result in a slowdown in the Indian economy, Reserve Bank of India’s Governor Shaktikanta Das told reporters here.
Addressing the media here, Das said the Covid-19 outbreak would impact India directly through trade channels where exposure to China is relatively high.
“Second round of effects of the pandemic could operate through a slowdown in the domestic economic growth. As a result of synchronized slowdown in global growth and as a part of that the growth momentum in India would also be impacted somewhat,” Das said.
He pointed out that sectors such as tourism, airlines, hospitality industry, transporters and domestic trade are suffering business losses. Overseas and domestic equity markets, forex and bond markets are also not immune, Das said.
The RBI chief added that the central bank was still evaluating the impact of the pandemic on the Indian economy and measures like an interest rate cut would be considered during the meeting of the monetary policy committee. He however pointed out that India was relatively insulated from the global value chain but still it was integrated somewhat with the global economy and hence would suffer some impact from the pandemic
Separately, the RBI in a circular asked all banks and financial institutions to assess the impact on their balance sheet, asset quality, liquidity, among others, in the wake of the potential threat
arising out of the spread of the virus in India.
“Besides taking steps for ensuring business process resilience, supervised entities should also assess the impact on their balance sheet, asset quality, liquidity, etc. arising out of potential
scenarios such as further spread of COVID-19 in India and its effect on the economy, contagion from wider disruption in the global economy and the global financial system, etc,” RBI said in the circular.
