India cuts rates in emergency move to counter virus fallout

March 27, 2020 16:09
India is in 'battle-ready mode' and launching various measures to ease the economic pain arising from the coronavirus pandemic, RBI Governor Shaktikanta Das says. Photo: Bloomberg

The Reserve Bank of India (RBI) slashed interest rates in an emergency move on Friday to counter the economic fallout from the coronavirus pandemic.

The central bank lowered the benchmark repo rate by 75 basis points to 4.40 percent after a video conference meeting of its monetary policy committee, Reuters reports.

The meeting was brought forward to respond to the crisis, which saw the federal government lock down the country in order to slow the spread of infections in the country.

"Clearly a war effort has to be mounted and is being mounted to combat the virus, involving both conventional and unconventional measures in a continuously battle-ready mode,” RBI Governor Shaktikanta Das said.

The rate cut came a day after the federal government announced a US$22.6 billion stimulus plan to ease the pain of the poor through direct cash transfers and food security measures.

Prime Minister Narendra Modi has asked India’s 1.3 billion people to stay indoors for three weeks in the biggest lockdown anywhere, shutting down Asia’s third largest economy and leaving millions of economically vulnerable people without work.

Even before the pandemic stuck, India’s economy was struggling.

Growth has probably weakened to at least an eight-year low this quarter, and is likely to slow even more sharply in the next six months, according to a Reuters poll of economists.

India has reported 723 coronavirus cases, and 17 people have died, according to the health ministry, but there are fears the toll could easily swell.

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