RBI ANTICIPATES RETAIL INFLATION TO FALL BELOW 4%
On April 17, 2020, the RBI governor Shaktikanta Das stated that the inflation was on the declining trajectory and there could be a possible fall below the central bank’s target of 4% by the second half of the fiscal year amidst challenges posed by COVID-19 pandemic. Mr Das, in an early morning video conference, stated, “In the period ahead, inflation could even recede further, barring of course any supply-side disruptions and may even settle well below the target of 4% by the second half of 2020-21.”
Citing the data of National Statistical Office (NSO) released on April 13 that showed the CPI inflation for March that fell to 5.91%, the RBI governor Mr Das said that even if it was based on the data available till March 19, it reflected the softening of food inflation by about 160 basis points due to the easing prices of eggs, fish, meat, pulses, vegetables, fats, oils, sugar and fruits.
RBI MONITORS ALL MACRO PARAMETERS ON A REGULAR BASIS
The RBI governor said that the economic activity of the country has come to a standstill during the lockdown and also pointed out that the Reserve Bank of India is “monitoring all macro parameters on a continuous basis.” Though the impact of the coronavirus was not captured in the index of industrial production data (IIP) for February, the contraction in exports in March at 34.6% was much more severe than during the global financial crisis of 2008-09. The RBI governor also said that the production and sales of vehicles declined sharply in March 2020 along with electricity consumption due to the closure of all industrial processes pertaining to the nationwide lockdown.