Author: Niranjan Hiranandani, President- ASSOCHAM and NAREDCO
Fresh liquidity of Rs. 3.74 lakh crores injected into the system by unleashing staunch arsenal support by strong fiscal measures timely announced. In the crucial time where the Indian economy is battling the exponential contagion, fresh liquidity that is pumped in the system will certainly help to mitigate the stressed cash flow and debt pressure in the economic system. The RBI has rightly packaged the relief measures by amplifying all the best instruments to act as an economic troubleshooter to salvage Indian economic slump amidst world recession.
In a much-awaited move, RBI has come up with measures to expand liquidity as it also eases banking regulations. It has cut rates and also announced a moratorium of three months of EMIs on all outstanding loans. Stakeholders in the Indian economy will now breathe a sigh of relief, as these moves reflect aggressive measures to take on the economic crisis caused by the COVID-19 pandemic.
As the RBI Governor pointed out, these moves will enhance liquidity and ensure the smooth functioning of financial institutions, while the EMI moratorium will ensure no impact on credit ratings on loan repayments. The volume of measures carried out by the apex bank to infuse liquidity amounting to Rs. 3.75 lakh crores back in the system is robust and applauded to uplift market sentiments.
This fiscal relief package in addition to the FM’s Rs 1.7 lakh crore relief package ensures that the government is vigilant to retrieve the nation out of economic pain and safeguard job loss.
He further emphasized that the reverse repo rate which has been cut by 90 basis points stands at 4 percent now. This should compel banks to lend more to all the adversely hit sectors.
I echo his sentiments when he said: “Covid-19 is upon us but this too shall pass.”
The success of the masterstroke announcement by RBI will come out in quick transmission of these liquidity tools down the line to uplift the appetite among the India INC to notch up the economic revival.