Tribune News Service

New Delhi, June 4

Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday admitted that the unexpectedly higher rates of morbidity and mortality in the second wave have impaired recovery.

“However, the impact on the economy is likely to be relatively contained because restrictions on mobility are regionalised and businesses have adapted to pandemic working conditions,” said Das, while announcing a one per cent cut in the RBI’s GDP estimates for the current fiscal to 9.5 per cent.

“We will continue to think and act out of the box, planning for the worst and hoping for the best. The measures announced today, in conjunction with other steps taken so far, are expected to reclaim the growth trajectory from which we have slid,” he said, while announcing the decisions of the RBI’s Monetary Policy Committee (MPC).

The MPC projected retail inflation at 5.1 per cent for this fiscal, within its target range of 4 per cent with a margin of 2 per cent on either side, said Das.

The MPC kept the interest rate unchanged which means that home and auto buyers who have borrowed on flexible rates will continue availing of the lowest interest rates in two decades.

The RBI chief struck a positive note by observing that the “need of the hour is not to be overwhelmed by the current situation, but to collectively overcome it”.

Assuring adequate liquidity, Das said the RBI would buy Rs 1.2 lakh crore of bonds under the Government Securities Acquisition Programme (G-SAP) 2.0 in the second quarter.

The RBI chief mentioned that a separate liquidity window of Rs 15,000 crore would be opened for the hard-hit contact-intensive sectors such as hotels, tour operators, bus operators, spa clinics and beauty parlours.

Small Industries Development Bank of India (SIDBI) will be given Rs 16,000 crore in addition to the Rs. 15,000 crore announced on April 7.

The Resolution Framework 2.0 for MSMEs announced on May 5 has been expanded to include exposures up to Rs 50 crore as against the earlier Rs 25 crore.

The path for Foreign Portfolio Investors (FPIs) in the debt market has been smoothed with authorised dealer banks permitted to place margins on their behalf for transactions in government securities.