In line with the Economic Survey 2020, RBI governor Shaktikanta Das announced that the Central Bank has projected a growth rate of 6% for FY 20-21. Speaking at a joint press conference after the post-budget meet with FM Nirmala Sitharaman, Das said that the transmission of rate cut is gradually increasing up to 69 basis points. He also said that the surplus liquidity is helping with monetary policy transmission.
"We have given a growth projection of 6% for the next year, which is in line with Economic Survey projection. “I won’t agree that rate cut impact is plateauing out. The transmission of policy rate cuts is improving steadily," said Das. The RBI had left the repo rate unchanged earlier this month while announcing its sixth bi-monthly monetary policy statement for 2019-20.
In her Budget speech, Finance Minister Nirmala Sitharaman projected the nominal growth rate for the year 20-21 at 10%, followed by 12.6 percent and 12.8 percent in FY22 and FY23, respectively. Even before the significant slowing in economic expansion in 2019, nominal GDP growth had averaged about 11 percent over the five years from 2014 to 2018. Moody's, on the other hand, projected that the economy to rebound at a more modest pace, with nominal GDP growth rising to around 8.7 percent in fiscal 2020 and 10.5 percent in fiscal 2021, from about 7.5 percent in fiscal 2019.
Union Finance minister Nirmala Sitharaman tabled the Union Budget for the year 2020-2021 and delivering the longest budget speech for over 160 minutes. Sitharaman announced a number of schemes and policies aimed at strengthening the economy under the Modi government. In a major decision, the Finance Minister announced a Life Insurance Corporation of India (LIC) will be listed as part of the government disinvestment initiative and the government will sell also its stake in the IDBI bank.
The government also announced a new 'optional' tax regime by slashing income tax rates and abolished DDT. To safeguard investors she also announced an increase in insurance coverage for each depositor from Rs 1 lakh to Rs 5 lakh. The Finance Minister said that the three themes on which the Budget 2020 was based were: aspirational, economic development, caring society.