RBI announces Rs 50,000 cr boost for emergency health sector, relief to MSMEs
Reserve Bank of India Shaktikanta Das during his unscheduled address Wednesday, May 5, 2021, thanked the country's frontline workers such as doctors, nurses, other healthcare workers, and police personnel for their selfless efforts in fighting the pandemic and saving lives. RBI will continue to monitor the emerging COVID19 situation and will deploy all resources and instruments at its command especially for the citizens, business entities, and institutions beleaguered by the second wave, he added. Governor Das said the central bank has decided that the second purchase of government securities (G-SEC) of Rs 35,000 crore under G-SAP 1.0 has been advanced to May 20, 2021."Will ramp up COVID-related healthcare infrastructure by on-tap term liquidity facility of Rs 50,000 crore with the tenor of up to 3 years at repo rate is being opened till March 31, 2022, for vaccine manufacturers as well," the RBI Governor said. Banks will open a Covid loan bank which shall be classified as priority sector lending. Das said Small Finance Banks (SFBs) are now permitted to regard fresh on-lending to microfinance institutions (MFIs) with asset size up to Rs 500 crore, as priority sector lending; this facility available up to March 31, 2022."The devastating speed with which the virus affects has to be matched by swift and wide-ranging actions that are sequenced, calibrated and well-timed so as to reach out to various sections including the most vulnerable," Governor Das further added. In order to provide further support to MSME and unorganised sector businesses, special long-term (3-year) repo operations of Rs 10,000 crore for fresh lending by SFBs upto Rs 10 lakh per borrower has been allowed up to October 21, 2021. On global macroeconomic growth outlook, Das said the global economic outlook is "highly uncertain and clouded with downside risks". On the domestic front, he said RBI doesn't expect any broad deviation from its economic forecast made in February. He said further details will be made available during the forthcoming monetary policy review due in the first week of June 2021."In the run-up to next MPC (Monetary Policy Committee) when our teams are analysing various incoming data, we don't expect any broad deviation from projections made in our April MPC but you'll have to wait for MPC statement due in June first week," said Das.Das said inflation for the rest of the year will be influenced by COVID restrictions. Do not see any wide variation from our earlier inflation estimate, he said. However, the forecast of a normal monsoon by IMD is expected to sustain rural demand and overall output in 2021-22, while also having a soothing impact on inflation pressures. Normal monsoon should help contain food price pressures, especially in cereals and pulses.Merchandise imports and exports continue to witness robust growth performance, even in April 2021. Foreign exchange reserves give us the confidence to deal with global spillovers, the RBI Governor further added. RELATED NEWS Sensex, Nifty edge 0.5% higher ahead of RBI Governor's address RBI Governor Shaktikanta Das to make unscheduled speech at 10 am today Banks request relief from RBI as second wave rages, plan to seek moratorium Highlighting other economic indicators, Das said rail freight registered a growth of over 76% year-on-year in April, 2021 which comes on low base of las year. Toll collections in April suggest that mobility declined but unlike an abrupt halt during April 2020.Automobiles registration in April 2021 shown moderation compared to March. The tractor segment continues robust pace which points towards robust rural economy despite the slowdown in urban growth.