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India not immune, coronavirus may slow down growth: RBI Governor

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New Delhi, Mar 16: Amid meltdown over coronavirus outbreak, Reserve Bank of India Governor Shaktikanta Das said that India is not immune to the deadly virus and that growth momentum of the country could be impacted by COVID-19.

Shaktikanta Das

Addressing a press conference, the RBI governor said that even as the Indian economy was relatively insulated from the global value chain, Covid-19 could impact India directly through trade channels, in which exposure to China is relatively high.

"As far as the Indian economy is concerned, India is relatively insulated from the global value chain to that extent impact on India will be less. But India is integrated to global economy so there will be some impact," the RBI Governor said.

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"Second round of effects of the pandemic could operate through a slowdown in the domestic economic growth and it would obviously be a result of synchronised slowdown in global growth and as a part of that, the growth momentum in India would also be impacted somewhat," he said.

"Sectors such as tourism, airlines, hospitality industry and domestic trade and transporters are suffering a loss of activity. Spillovers are being transported through finance and confidence channels to overseas and domestic equity markets. Forex and Bond markets are also not immune," he further said.

However, the central bank chief did not announce a rate cut following similar steps by the world's leading central banks. Instead, he said that the RBI was monitoring the situation an announcement will be made after further assessment.

The US Federal Reserve has cut the policy rates to near zero levels in a span of 10 days.

Similarly, the Bank of England has also slashed the rates by 50 basis points, and so did the European Central Bank.

Since the coronavirus outbreak that began in China in mid-November last year, over 6,000 people have been killed, most of them in China.

While the pandemic has ebbed in China, the epicentre has moved to Europe now with Italy and Spain being the worst-hit, forcing both the nations to go on complete lock-down.

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