The RBI [Reserve Bank of India] Governor Shaktikanta Das is waging a virtual war against the corona-led economic crisis that is going to take place sooner. With India under complete shutdown, no business activities are going on and this has inflicted on the economy of the country severely. Though this effect is still under maintenance, it will flourish and cause damages to many global economies. This will cause serious issues in the lives of many middle-class and poor peoples. Reacting to this disastrous situation, RBI Governor Shaktikanta Das spoke about the upcoming recession, inflation, significance of previous GDP estimates, other important questions in a press conference.
Government Economic Reforms
Finance Minister Nirmala Sitharaman assured Rs 1.7 lakh Cr stimulus to help the economy tide over the current crisis and render essential goods to every people. Sitharaman has announced an economic relief package, which includes food security measures, direct cash transfers for lower-income groups, monetary help to pensioners, widows and differently-abled, free gas cylinders, and many more goods and essentials. After Finance Minister announced this mega economic relief packages for every Indian citizen, the RBI Governor Shaktikanta Das took a step ahead to introduce strategies to give further relief and support to businesses, banks, as well as every common man.
RBI Policies for next 3 months
RBI suggests that the Monetary Policy Committee will cut repo rate by 75 basis points making loans cheaper. Also, it has allowed a three months moratorium on retail loans. This will lead to people having more cash in hand to relieve out from the deadly economic effects of corona. He said that this measure will help in reviving growth and preserving financial stability. Also, the reverse repo rate has been cut down to 4 percent by 90 basis points. He said that this will reduce banks passively depositing funds with the RBI and instead lend it to the business, and other productive sectors. The 100 basis point cut in the cash reserve ratio (CRR) will help banks with more money. He believes that this move will ensure financial stability. Also, he gave a brief idea of RBI’s liquidity measures.
Deploying RBI operation for Pandemic Crisis
Governor Shaktikanta Das spoke about how liquidity measures will be deployed with the support of banks. He said that the RBI will conduct auctions for its three to four-year plan on Long-Term Repo Operation [LTRO]. The appropriate sizes for a total amount up to Rs 1 lakh crore at a floating rate linked to the policy repo rate. This will be done commercially with investment-grade bonds, commercial paper, etc. This will ensure that they don’t seize up. This ides will help ease out their pressure on mutual investments.
Unpredictable Economy
The Governor also gave out a comparative study of the previous year’s GDP being unrealistic. He cited that most sectors of the Indian economy are expected to be adversely impacted by the spread and outbreak of coronavirus. Mr.Shaktikantha Das also added that the real GDP growth of 4.7 percent for Q4 FY20 in the second advance estimates of NSO, less than the annual estimate of 5 percent for the year is at risk due to the deadly pandemic’s impact on the economy.
The Governor spoke about his previous plans for reviving the previous year’s downfall.  But his expectations were broken. He also said that recovery in 2020 from 2019’s situation in global economic growth has been dashed by the intensity, spread, and duration of the pandemic. In the end, he also forecasts a rising probability of recession with slip in large parts of the global economy.
