India’s central bank slashed interest rates by 4.40% in an emergency move on Friday to counter the economic fallout from the coronavirus pandemic after the federal government locked down the country in order to slow the spread of infections across the region.
The Reserve Bank of India lowered the benchmark repo rate by 75 basis points after a video conference meeting of its monetary policy committee (MPC), which was brought forward to respond to the crisis.
“Clearly a war effort has to be mounted and is being mounted to combat the virus, involving both conventional and unconventional measures in a continuously battle-ready mode,” Governor Shaktikanta Das said.
The move came a day after the federal government announced a $22.6 billion stimulus plan to ease the pain of the poor through direct cash transfers and food security measures.
Prime Minister Narendra Modi has asked India’s 1.3 billion people to stay indoors for three weeks in the biggest lockdown anywhere, shutting down Asia’s third largest economy and leaving millions of economically vulnerable people without work.
India has reported 723 coronavirus cases, and 17 people have died, according to the health ministry, but there are fears that toll could easily overtake other hard hit nations like the United States, China and Italy.