Coronavirus could push India closer to a recession: More so than previously thought

Economic activity has come to a grinding halt around the world. India too, is reeling for the ill-effects of coronavirus-induced slowdown.

India could grow by less than two percent this year.

Empty streets are the new normal as stores are shut and flights grounded. Additionally, all restaurants and cinemas are empty.

India's growth rate was slowing even before coronavirus entered the country, but the pandemic could push India closer to a recession.

The coronavirus is not just a health emergency for the government, it has triggered one of the worst economic downturns.

One that is bound to impact incomes and salaries, the crisis has already led to layoffs.

Reports say, people have been asked to leave in IT, media and startup companies. Potentially, millions of jobs are at risk.

This includes India's estimated 120 million migrant labourers.

A trend?

The numbers may be speculative right now. But they do signal the trend.

The virus will drag the economy down, and the Indian government hopes to contain the damage.

Last month, Finance Minister Nirmala Sitharaman had announced a 1.7 lakh crore relief package.

One that was primarily targeted at those who were hit the hardest.

Now, reports claim that the government could be working on a second stimulus package.

The Reserve Bank of India too, is doing its bit. On Friday, it announced a slew of measures.

“Now in order to encourage the banks to deploy these surplus funds in investments and loans in productive sectors of the economy it has been decided to reduce the fixed repo rate, reserve repo rate”, said Reserve Bank of India, Governor, Shaktikanta Das.

The reverse repo rate has been reduced by 25 basis points to 3.75 percent. This is the rate at which the RBI borrows funds from banks.

The cut is an attempt to discourage banks from parking cash with the central bank.

RBI has cut its key rates for a second time in three weeks. These moves could boost lending to businesses.

But experts believe that the Indian government needs to do more.

Many believe that a second stimulus package is no longer just a possibility, it is inevitable.