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Economy

Both the RBI and govt have taken care of vulnerable society and business community, says NITI Aayog’s Amitabh Kant

Updated : March 27, 2020 02:25 PM IST

The RBI Monetary Policy Committee (MPC) today cut the repo rate by 75 basis points to 4.40 percent. It was the first time the MPC met outside its bi-monthly meeting calendar. It also cut cash reserve ratio (CRR) by 100 basis points to 3 percent and allowed a 3-month moratorium to all banks, financial institutions on all loans.

Talking about this measure of the central bank to ease liquidity, Amitabh Kant, CEO at NITI Aayog said, “The RBI has taken some really big bold moves and especially in the context of the fact that the level of infection is still low in India."

"As a country if you look at what the government has done and what the RBI has done, we have taken some very unprecedented steps already. Today’s move by RBI signals a very big bold move. If you look in totality of what the government has done -- yesterday the finance minister announced for the vulnerable section of the society and that is about 1 percent of India’s GDP, but if you look at the kind of liquidity which RBI has brought in, it is massive amount of liquidity. Today’s announcement and what it has done earlier, it virtually amounts to close to about 3.2 percent on India’s GDP. So, actually we have really done an enormous lot as a country together,” he said in an interview with CNBC-TV18

He further added that the MPC instead of being obsessed with inflation has gone to face this challenge, it has focused on growth. Both the government and the RBI have worked in sync together to really take care of both the vulnerable society of India as well as taking care of the business community of India and therefore really now the challenge -- the liquidity risk has been taken care of for some time.”

“The RBI will now lend to banks at 4.4 percent, it will accept deposits from them at only 4 percent so what it is really telling them is that India needs to grow with a lot of more credit and India’s businesses need to be provided with liquidity and therefore you must lend. India’s debt to GDP ratio is still very low compared to other countries and therefore. it is really forcing the banks to go out and lend to Indian businesses because that is what they need. They need the banks to get out and banks to go and lend to Indian businesses., he further said, adding that the message of pushing the banks to go and lend to my mind is the biggest message that has gone in today’s big move by RBI.

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