The Reserve Bank of India on Thursday expressed fears that the condition of the domestic economy could worsen if the infection of the Covid-19 epidemic is prolonged. It is to be noted that the business has already been badly affected by this epidemic and the public restrictions imposed to deal with it and a major economic decline is expected to be recorded in the current financial year. Giving the findings of the bi-monthly meeting of the Reserve Bank’s Monetary Policy Committee, Reserve Bank Governor Shaktikanta Das said that if the epidemic is controlled first, it will have a ‘favorable’ effect on the economy. The Monetary Policy Committee anticipates that the improvement in the rural economy will be stronger as the kharif sowing is going well. Manufacturing units expect demand to increase from the second quarter.

The committee feels that demand will gradually improve by the first quarter of 2021-22. Das said that consumer confidence in July has weakened even more since the last survey of the Reserve Bank. The review says that demand from abroad will still remain weak. The world is in recession and world trade is decreasing. Das said, “It is estimated in the first half of the current financial year that real GDP (GDP) will be in a phase of contraction. Real GDP is expected to fall in the entire 2020-21. ”He said that if Covid-19 is contained early, it could have a‘ favorable ’effect on economic prospects. In case of prolongation, the monsoon is not expected to be normal, and the global financial market may have a ‘bad effect’ on the domestic economy. Das said the committee assessed that the state of the global economy remained weak in the first half of 2020 and there was a trend of retrenchment. He said that Covid 19 transition to new economies saw a new boom in July. This slowed down the initial signs of improvement in the economic situation in May-June.