New Delhi, Nov 12 (efe-epa)- The Reserve Bank of India (RBI or the central bank) warned Thursday that the Asian country has in all likelihood entered into technical recession for the first time in its history, coinciding with the government’s announcement of a new stimulus package of some $35 billion for its economy.
“India is likely to have entered a technical recession in the first half of 2020-21 for the first time in its history with two successive quarters of GDP contraction,” the RBI said in a press release.
The central bank’s analysis, which comes two weeks before official statistics are made public, anticipates an 8.6 percent fall in its GDP in the second quarter of the current fiscal year (April to March).
In the first quarter, India’s GDP plummeted by 23.9 percent due to the impact of the pandemic and the strict lockdown imposed across the country at the end of March to check the spread of the novel coronavirus.
Despite these figures, the RBI stressed that economic activity “rebounded sharply from May/June 2020 with the reopening of the economy, with industry normalising faster than contact-intensive service sectors, pointing to a short-lived contraction.”
In the face of declining economic activity due to the pandemic, the Indian Ministry of Finance announced fresh economic measures on Thursday, as a part of the government’s plan to overcome the challenges posed by the coronavirus crisis.
India is the second most affected country in the world by the Covid-19 virus in terms of caseload, and has so far recorded a total 8.6 million cases and 128,000 deaths.
The creation of new jobs is one of the main objectives of the government, which for two years will make social security contribution for new employees earning less than 15,000 rupees ($200) per month.
The ministry’s package includes other measures such as tax exemptions for the purchase of homes, as well as fertilizer subsidies. However, most of the current announcement is an extension of the programs that are already underway.
The measures amount to a public expenditure of some $35 billion, Finance Minister Nirmala Sitharaman revealed at a press conference.
The minister said that the measures rolled out by the government and the RBI to revive the economy, and which were announced over the last few months, together amount to around $400 billion or about 15 percent of India’s GDP. EFE-EPA