New Delhi: Reserve Bank of India (RBI) Governor Shaktikanta Das will address the media at 10 am on Friday (March 27, 2020). Beginning March 25, for a period of three weeks, India is under a complete lock-down to curb the spread of the COVID-19. This will have an impact across key economic segments including manufacturing, services, construction and tourism.
On March 26, the government announced a mix of measures including direct cash transfers and distribution of free food grains for a period of three months to help the economically weaker sections of the society tide over the crisis phase. Now, the RBI Governor is expected to spell out more measures.
On Thursday, Union Finance Minister Nirmala Sitharaman held a press conference and announced a relief package for the poor and migrant workers amid a 21-day countrywide lockdown to mitigate the impact of coronavirus (COVID-19) pandemic.
Besides, she also announced an insurance cover worth Rs 50 lakh per person for sanitation workers, ASHA workers, doctors, nurses and paramedics who are on the frontlines of the corona battle. Under the MNREGA scheme, the wage rate has been increased from Rs 182 to Rs 202, amounting to an increase of Rs 2000 per worker.
This will benefit 5 crore people. For old age pensioners and widows, an additional ex-gratia amount of Rs 1,000 for the next three months available in two instalments.
It will benefit 3 crore widows and senior citizens. The Union Minister also said that the EPFO regulation will be amended so that workers can draw up to 75 percent of the amount for their contingency expenditure. This will benefit 4.8 crore workers.
In the context of a major economic slowdown and a 21-day lock-down to counter the coronavirus spread, economists expect a rate cut by the monetary policy committee (MPC) latest by 3 April. But, the MPC can announce it earlier as well, considering the present scenario as an exception.
Market expects anywhere between 25-50 basis points rate cut in key rates. One bps is one hundredth of a percentage point. A significant rate cut at this juncture may not revive loan demand in a big way but can act as a sentimental booster to the financial system and lower the borrowing cost in the money market.
In the current rate cycle, the RBI has cut rates by 135 bps so far.
The RBI, which indicated that it was willing to act in coordination with the government to fight the COVID-19 impact on the economy, could announce a few measures to ease the pain on banks and industries which are suffering from the lock down.