The Reserve Bank of India announced several monetary easing measures, including extending moratorium on loan repayments by another three months, and an emergency cut in the policy repo rate. Governor Shaktikanta Das said that the Monetary Policy Committee, after an unscheduled meeting, cut policy repo rate by 40 basis points to 4.0%.
The RBI Monetary Policy Committee voted unanimously for reduction in the policy repo rate, while voted 5:1 in favour of the quantum of the cut, Shaktikanta Das said. Consequently, the reverse repo rate now stands reduced to 3.35%, while the MSF rate is down to 4.25%. To ease the financial stress on people and businesses, Shaktikanta Das said that the RBI has also allowed deferment of repayments of loans and working capital by another three months from June 1 to August 31 due to lockdown extension.
Shaktikanta Das, while laying out the economic conditions prevailing in India amid the ongoing coronavirus crisis, also said that food inflation may remain under supply side shock, and that the elevated level of inflation in pulses is ‘worrisome’. RBI’s announcement follows the mega Rs 21 lakh crore economic package announced by the Narendra Modi government recently. In the wake of the ongoing coronavirus pandemic, RBI has so far announced various liquidity and monetary measures, totalling an economic value worth Rs 8 lakh crore. Meanwhile, FY21 GDP is expected to remain in negative due to the coronavirus pandemic.