Reserve Bank of India (RBI) Governor Shaktikanta Das has said that the central bank will continue to monitor the emerging COVID-19 situation and will deploy all resources and instruments at its command for citizens, business entities, and institutions beleaguered by the second wave.
“RBI will closely monitor the impact of the second wave of COVID-19 on macroeconomic and financial conditions. CPI inflation is dubbed to 5.5 per cent in March ’21 from 5.0 per cent in February, on the back of a pick-up in food and fuel inflation,” Das said while addressing a press conference.
India has been witnessing a massive surge in COVID-19 cases in its second wave, recording over 3 lakh new cases and over 3000 related deaths on a daily basis, thus impacting the country’s health care infrastructure as well as the economy.
“Localised and targeted containment measures are enabling businesses and households to adapt; hence, effect on aggregate demand is expected to be moderate in comparison to last year,” he added.
The RBI Governor also saluted the contribution of health care workers, law enforcement and other frontline workers who have been battling the COVID-19 pandemic selflessly.
“From having flattened infections, India today is fighting a ferocious rise in infections and mortalities. India has mounted a valiant defence to ramp up vaccines and medical support; shoring up livelihoods and restoring normalcy in access to workplaces, education and incomes becomes an imperative,” said Das.
“Devastating speed of virus has to be matched by swift, wide-ranging, sequenced and well-timed actions which reach out to various sections, including the most vulnerable.
“Global economy is showing signs of recovery; activity remains uneven across countries and sectors, clouded by downside risks. IMF has in April ’21 revised global growth projections for 2021 to 6 per cent from 5.5 per cent, on the assumption of availability of vaccines by summer of 2021,” he added
The Central Bank will conduct a special 3-year long-term repo operation of Rs 10,000 crore at repo rate or Small Finance Banks. A limit of Rs 10 lakh per borrower has been set for the SFB scheme and the offer will be open till October 31, 2021. SFB on-lending to MFIs to be categorised as a priority sector.
Banks are being incentivised to extend swift credit to weak sectors. Banks will create a COVID loan book in their balance sheets and can park money equal to COVID book with RBI at 40 bps above reverse repo rate.
The forecast of a normal monsoon by IMD is expected to sustain rural demand, overall output. Even with local containment measures, everyone has learnt how to continue businesses.
The RBI Governor concluded by saying that the immediate objective is to preserve human lives. RBI is committed to go unconventional and be proactive to deal with the evolving situation.
(With ANI Inputs)