Reserve Bank of India (RBI) Governor Shaktikanta Das briefed the media on Friday, 22 May, on the latest policy announcements as the COVID-19 lockdown weighs heavily on the Indian economy.
The RBI governor announced slashing of repo rate by 40 basis points from 4.4 % to 4%. Meanwhile, the reverse repo rate stands reduced to 3.35%. The three-month loan moratorium has also been increased from 1 June to 31 August.
He said that the impact of COVID-19 has forced the top 6 states to contribute to manufacturing in red, while effecting losses in production and crashing demand, and a dip in power and fuel consumption.
Here are some of the key announcements.
Here are a few other statements made by RBI Governor, Shaktikanta Das.
- 'GDP growth in 2020-21 expected to remain in negative category with some pick up in the 2nd half'
- India is seeing a collapse of demand; electricity, dip in petroleum product consumption; fall in private consumption
- Amidst this encircling gloom agriculture and allied activities have, however, provided a beacon of hope on the back of an increase of 3.7% in food grain production to a new record
- The biggest blow came from private consumption slump with consumer durables production falling 33 percent in March 2020
- Measures announced today can be divided into 4 categories: to improve functioning of markets, to support exports and imports, to ease financial stress by giving relief on debt servicing and better access to working capital and to ease financial constraints faced by state governments
- RBI to roll over Rs 15,000 crore refinance facility for SIDBI for 90 days
- Export credit period has been increased to 15 months from 1 year
The central bank governor's address comes just days after the Centre announced a Rs 20 lakh crore economic package to tide over the impact of the coronavirus crisis, with Finance Minister Nirmala Sitharaman announcing different tranches aimed at MSMEs, farmers, migrant labourers, vendors, etc, in daily press briefings.
In mid-April, Shaktikanta Das had made several announcements regarding India's financial situation amidst the pandemic, including lowering the reverse repo rate and announcing targeted longer-term refinancing operations TLTRO-2.0.
On 27 March, RBI had cut the repo rate by a record 75 basis points to a 15-year-low of 4.40 percent. It was the steepest cut since October 2004.
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