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By Sanjeev Miglani and Swati Bhat
NEW DELHI/MUMBAI, March 27 (Reuters) - India's central bankslashed interest rates in an emergency move on Friday to counterthe economic fallout from the coronavirus pandemic after thefederal government locked down the country in order to slow thespread of infections across the region.
Prime Minister Narendra Modi has asked India's 1.3 billionpeople to stay indoors for three weeks in the biggest lockdownanywhere, shutting down Asia's third largest economy and leavingmillions of economically vulnerable people without work.
The Reserve Bank of India lowered the benchmark repo rate by75 basis points to 75 basis points to 4.40% after a videoconference meeting of its monetary policy committee (MPC), whichwas brought forward to respond to the crisis.
"Clearly a war effort has to be mounted and is being mountedto combat the virus, involving both conventional andunconventional 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 throughdirect cash transfers and food security measures.
Even before the pandemic stuck, India's economy wasstruggling and growth has probably weakened to at least aneight-year low this quarter, and is likely to slow even moresharply in the next six months, according to a Reuters poll ofeconomists.
India has reported 723 coronavirus cases, and 17 people havedied, according to the health ministry, but there are fears thattoll could easily overtake other hard hit nations like theUnited States, China and Italy.
Modi and international experts have said that India faces atidal wave of infections if it doesn't take tough steps. But,efforts to combat the spread of the virus are handicapped bylimited medical facilities and inadequate supplies of testingkits, according to experts.
India is hoping that it can keep its people under lockdownuntil mid-April it would be able stem transmission of the viruswithin communities. Officials say infections have beenconcentrated so far among people either coming from overseas orin contact with them.
Other countries in South Asia, home to a fifth of theworld's population also signalled signs of distress, draggedinto economic crisis by the fallout from the pandemic.
Pakistan, where the number of coronavirus cases neared1,200, has asked the International Monetary Fund (IMF) for afresh $1.4 billion loan.
Sri Lanka has asked for a moratorium on its internationaldebt repayments.
For India, aside desperation resulting from the lost jobs,the rapidly decelerating economy risked exacerbating an alreadycritical problem of bad debts.
"The RBI has pulled out its bazooka," said PrithvirajSrinivas, chief economist at Axis Capital in Mumbai.
"It has pulled down the cost of capital through deep policyrate cuts, it has increased the quantity of money through cashreserve ratio cuts and asset purchases, and more importantlyreduced financial stress in the economy through its 3-monthmoratorium on all term loans as well as working capital."
Following is the spread of the coronavirus in South Asia'seight nations:
Confirmed cases, government figures
Pakistan 1,179
India 723
Sri Lanka 106
Afghanistan 84
Bangladesh 39
Maldives 13
Nepal 3
Bhutan 3
TOTAL 2,150
(Additional reporting Euan Rocha, Nupur Anand, Abhirup Roy inMumbai, Nivedita Bhattacharjee in Bengaluru; Editing by SimonCameron-Moore) ((sanjeev.miglani@thomsonreuters.com; +91 11 49548038; ReutersMessaging: sanjeev.miglani@thomsonreuters.com@reuters.net))
