Amid rising inflation, RBI keeps lending rate unchanged, says 'real GDP likely to remain negative in FY21'
New Delhi | Jagran Business Desk: The Reserve Bank of India (RBI) on Thursday announced that it has decided to keep the repo rate and reverse repo rate unchanged at 4 per cent and 3.3 per cent respectively, saying it will maintain its "accommodative stance".
While addressing the media after the RBI meeting of Monetary Policy Committee 2020, Governor Shaktikanta Das said that "global economic activity has remained fragile but global financial markets have been buoyant" amid the ongoing coronavirus pandemic.
Das noted that economic activity had started to recover, but the surge in coronavirus cases has forced imposition of lockdowns, hence several high-frequency indicators have levelled off while adding that RBI is the only central bank in the world which has "set up a special quarantine facility for continuity of critical operations".
"Accommodative stance of the monetary policy will continue as long as necessary to revive growth and mitigate the impact of coronavirus pandemic, while ensuring that inflation remains within target going forward," news agency ANI quoted Das as saying.
The RBI had last revised its policy rate on May 22, in an off-policy cycle to perk up demand by cutting interest rate to historic low.
Speaking about India's GDP rate, Das noted that due to the ongoing coronavirus pandemic, the country's GDP growth in the first half of the year is estimated to remain in the "contraction zone". He also said that the real GDP growth is also estimated to be negative for the year 2020-21 as a whole.
"With COVID19 infections rising under fragile micro-economic and financial conditions, we propose to take regulatory and developmental measures - enhance liquidity support for financial markets, ease financial stress caused by COVID19 while strengthening credit discipline improve the flow of credit, deepen digital payment systems and facilitate innovations by leveraging technology," Das was quoted as saying by ANI.
The RBI Governor also announced that the central bank will provide additional liquidity of Rs 10,000 crore to NABARD and National Housing Bank which will help the NBFCs and housing sector tackle the ongoing liquidity crisis.
Das further informed that the RBI is consulting an expert committee led by KV Kamath for resolution plans with detailed guidelines, adding that priority sector lending status has been extended to start-ups.
Posted By: Aalok Sensharma