The Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday addressed the media days after Finance Minister Nirmala Sitharaman unveiled details of the Rs. 20 lakh crore economic packages.
Shaktikanta Das said India’s gross domestic product (GDP) will see contraction and May well be in negative territory in FY21.
Governor Shaktikanta Das said that the Monetary Policy Committee (MPC) cut policy repo rate by 40 basis points (bps) to 4% from 4.40% and reverse repo by as much to 3.35% from 3.75%. The RBI Monetary Policy Committee voted unanimously for a reduction in the policy repo rate, while voted 5:1 in favour of the quantum of the cut. The reverse repo rate now stands reduced to 3.35%, while the MSF rate is down to 4.25%.
The moratorium period has been extended by another three months from June 1 to August 31 due to lockdown extension by Governor Shaktikanta Das. As the result of this moratorium individuals’ EMI repayments of loans taken were not deducted from their bank accounts, providing much-needed liquidity. The EMI repayment will restart only after the moratorium period expires on August 31.
The Monetary Policy Committee is of the view that headline inflation in first half of 2020 will be stay intact but by Q3 and Q4 it may fall below the target of 4 percent.
The inflation outlook is highly uncertain due to the outbreak of the COVID-19 pandemic and expressed concern over elevated prices of pulses Shaktikanta Das on Friday.
EXIM banks have been allocated Rs 15,000 crore by RBI to avail US dollar swap facility. This will have a rollover facility to up to one year.
Shaktikanta Das says India’s merchandise exports slumped to the worst level in 30 years as coronavirus crisis paralysed demand across the globe.
In trade activities the deepening of contraction has hampered India, Maximum permissible period of pre and post shipment of credits increased from 1 year to 15 months.
RBI Governor says India seeing a collapse of demand; electricity, dip in petroleum product consumption; fall in private consumption. He also said Agriculture and allied activities have given a beacon of hope for the country
RBI governor Shaktikanta Das says that the biggest blow from COVID-19 came from private consumption slump with consumer durables production falling 33 percent in March 2020.
The RBI had on March 27 slashed the benchmark interest rate by a massive 75 basis points and also announced a three-month moratorium to be given by banks to provide relief to borrowers whose income has been hit due to the lockdown.
RBI Governor Shaktikanta Das held a meeting with heads of both public and private sector banks to take stock of the economic situation and review implementation of various measures announced by the central bank.
-Davinder Panesar, NMTV News