COVID-19 lockdown on commerce and people will impact economic growth severely
Money & Finance:: The Reserve Bank of India’s (RBI) infusion of liquidity in the market and measures taken to lower the interest rates have led to downward movement of yields in the bond market. Nonetheless, the increase in government’s borrowing and the Foreign Institutional Investor (FII) outflows in the debt market will also exert upward pressures on yields. Dun & Bradstreet expects 15-91-day Treasury-Bill yield to average at around 3.4%-3.6% and 10-year Gr-sec yield at around 6.5%-6.6% during May 2020.
Bank credit is expected to further moderate in May 2020 as economic activities remain disrupted owing to the confinement measures and increase in positive cases. The slowdown in demand for retail loans owing to slump in consumption demand is expected to continue during May 2020. Dun & Bradstreet expects the Bank Credit to remain at around 5.8%-6.0% during May-2020.
External Sector: The rupee is expected to witness depreciation pressures due to increase in FII outflows, weak sentiments surrounding the COVID-19 pandemic as number of confirmed cases continue to witness a spike, and weak domestic and global growth outlook. Dun & Bradstreet expects the rupee to remain at around 75.6-75.8 per US$ during May-2020.