Local lockdowns, inflation, GDP growth: What RBI governor Shaktikanta Das said
Reserve Bank of India (RBI) governor Shaktikanta Das during the Monetary Policy Committee(MPC) statement made several announcements to boost the economic recovery of the country and enhance digital platforms for the access of all.
Here are the key highlights of the governor’s statement:
First and foremost of all, the central bank maintained the status quo in the repo rate as it stands unchanged at 4 per cent and the reverse repo rate stands at 3.35 per cent. He said the MPC unanimously decided to keep the rates unchanged to mitigate the impact of the Covid-19 pandemic.
The governor of the central bank said the projection of the real GDP growth for the fiscal period of 2021-2020 is retained at 10.5 per cent. On Tuesday, the International Monetary Fund (IMF) projected India’s growth rate to jump to 12.5 per cent in 2021.
“The recent surge in Covid-19 cases adds uncertainty to the domestic growth outlook amid tightening of restrictions by some state governments,” Das said, adding that regional lockdowns and restrictions can delay the return to normalcy. The bank will support the market with adequate liquidity, Das also said.
Das said the government retained the inflation target at four per cent with the lower and upper tolerance levels of two and six per cents respectively, for the next five years from April 2021- March 2026.
The governor also announced several additional measures ‘with a view to nurture recovery’ as stated in developmental and regulatory policy.
The additional measures include fresh lending of ₹50,000 crore to all Indian financial institutions like NABARD, National Housing Bank (NHB), and Small Industries Development Bank of India (SIDBI) to maintain a continuous flow of credit.
The renewed jump in Covid-19 infections in certain parts of the country and the associated localised lockdowns could dampen the demand for contact-intensive services, restrain growth impulses and prolong the return to normalcy. In such an environment, continued policy support remains necessary.
The governor also announced the extension of the deadline for the TLTRO scheme by six months to September 30.
Further, the bank has also extended the use of central payment systems like RTGS and NEFT to non-banking service providers like PPIs and trade platforms regulated by the RBI.
Also Read | RBI clears ₹21,658 cr CCL for Punjab
To check the financial inclusion index, the governor said an FCI report will be created and published every year in July for the year ending in previous March.
The maximum end-of-day balance for payments banks has also been increased from ₹1 lakh to ₹2 lakh by the RBI.
Showing interest in the potential of asset reconstruction companies (ARC), Das said a committee will be formed to review the working of ARCs.
The governor also urged the market players to be aware of every communication from the central bank and said the bank will take all measures necessary to "insulate domestic financial markets from global spillover."