Page 34 - The Indian EYE 050721

Business EYE MAY 07, 2021 | The Indian Eye 34

economy in deep trouble? reserve Banks

lends a hand amid a surging pandemic

RBI Governor announced measures to protect small and medium businesses and

individual borrowers from the impact of the intense second wave of COVID-19

Our Bureau onslaught,” the RBI said.
“Apart from contact-intensive
New Delhi sectors, activity indicators large-

eserve Bank of India ly remained resilient in March
(RBI) Governor Shak- and grew beyond pre-pandemic
Rtikanta Das on Wednes- levels on the back of strong mo-
day said that the central bank mentum rather than statistical
will continue to monitor the base effects,” it added.
emerging COVID-19 situation The RBI, however, is hopeful
and will deploy all resources and the economic recovery will con-
instruments at its command for tinue based on data points like
citizens, business entities, and early corporate earnings, and
institutions beleaguered by the steady rises in capacity utiliza-
second wave. tion and electricity consumption.
“RBI will closely monitor the “It is not out of place to hope
impact of the second wave of that these positive monthly de-
COVID-19 on macroeconom- velopments reinforce each oth-
ic and financial conditions. CPI er and extend into a continuum
inflation is dubbed to 5.5 per RBi Governor Shaktikanta Das that spans the medium-term,”
cent in March ‘21 from 5.0 per the RBI said.
cent in February, on the back of will provide fresh lending sup- In respect of individual bor- The RBI said policy makers
a pick-up in food and fuel infla- port to a wide range of entities, rowers and small businesses who know from painful experience
tion,” Das said while addressing including vaccine manufac- had already availed restructuring that it is perilous to withdraw
a press conference. India has turers, importers/suppliers of under Resolution Framework stimulus too soon and that infla-
been witnessing a massive surge vaccines and priority medical 1.0, lenders have been permitted tion is less sensitive to demand
in COVID-19 cases in its sec- devices, hospitals/dispensaries, to use this window to modify such pressures than once feared,
ond wave, recording over 3 lakh pathology labs, manufacturers plans to the extent of increasing hence most central banks would
new cases and over 3000 relat- and suppliers of oxygen and the period of moratorium and/or lean towards growth in pandem-
ed deaths on a daily basis, thus ventilators, and logistics firms. extending the residual tenor up ic times, knowing that inflation is
impacting the country’s health “These loans will continue to to a total of two years. still only catching up.
care infrastructure as well as the be classified under priority sec- To enable the State govern- The RBI has repeatedly
economy. tor till repayment or maturity, ments to better manage their assured bond markets that it
“Localized and targeted whichever is earlier,” Mr. Das fiscal situation in terms of their would ensure ample liquidity
containment measures are en- said, adding that banks were ex- cash flows and market borrow- in the banking system and help
abling businesses and house- pected to create a COVID loan ings, maximum number of days smoothly execute the govern-
holds to adapt; hence, effect on book under the scheme. of overdraft (OD) in a quarter ment’s massive 12.06 trillion
aggregate demand is expected As part of a “comprehensive is being increased from 36 to 50 rupees ($161.15 billion) market
to be moderate in comparison targeted policy response”, the days and the number of consec- borrowing programme. Bond
to last year,” he added. RBI also unveiled schemes to utive days of OD from 14 to 21 yields, however, have remained
With India’s econom- provide credit relief to individual days, the RBI said. sticky above 6% and broad-
ic recovery threatened by the and MSME borrowers impact- Earlier on Monday, the cen- ly traded in a 6-6.25% range
COVID-19 second wave, the ed by the pandemic. “Restoring tral bank said in its monthly bul- over the last two months. “But
Reserve Bank of India stepped livelihoods has become an im- letin that India’s economic activ- when markets cannot keep the
in on Wednesday with measures perative,” Mr. Das said. ity has held up well against the faith and take the inverse bet
aimed at alleviating any financ- The RBI also announced recent spike in COVID-19 cases - that monetary policy cannot
ing constraints for healthcare in- measures to protect small and but the rise in infections risks stay loose for long – they are
frastructure and services, as well medium businesses and individ- protracted restrictions and in- frontrunning the economy. By
as small borrowers who may be ual borrowers from the adverse flationary pressures. “It is note- anticipating monetary policy
facing distress due to a sudden impact of the intense second worthy that economic activity tightening, markets may bring
spike in health expenditure. wave of COVID-19 buffeting in India is holding up admirably it about sooner than it is right,”
Under the scheme, banks the country. against COVID-19’s renewed the RBI warned.

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