The Reserve Bank of India said in its Monetary Policy Report that the growth outlook for 2020-21 was “looking up” before the coronavirus pandemic, but had been sharply altered by it.

The outlook for India’s economic recovery has been sharply altered by the coronavirus outbreak, the central bank said in its Monetary Policy Report, underlining the pandemic’s deepening impact on South Asia’s engine of growth.

“Prior to the outbreak of Covid-19, the outlook for growth for 2020-21 was looking up,” the Reserve Bank of India said.

“The Covid-19 pandemic has drastically altered this outlook. The global economy is expected to slump into recession in 2020, as post-Covid projections indicate.”

India’s economy expanded at its slowest pace in more than six years in the last three months of 2019 and was projected to clock in full-year growth of 5% which would be the lowest in over a decade.

Any benefit seen in the terms of trade from a prolonged downturn in the price of international crude is also unlikely to offset the economic drag from the coronavirus-induced lockdown of the country and loss of external demand, the central bank said.

The RBI, as it did in its policy statement last month, reiterated that conditions remained highly uncertain and said it is refraining from providing any projections on GDP growth.

Describing the present environment as “highly fluid”, the central bank said that it is assessing the “the intensity, spread and duration of Covid-19.”

India has reported over 5,000 active coronavirus cases and 166 deaths as of Thursday morning.

The RBI in an emergency move late last month cut its key lending rate by a bigger-than-hoped 75 basis points and announced several measures to inject rupee and dollar liquidity in the domestic markets.

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