India stands tall despite corona pandemic, says RBI Governor, announces 25 bps cut in reverse repo rate under LAF

Addressing the fact that global financial markets remain volatile, RBI Governor Shaktikanta Das in a video address on Friday said that India is expected to show a sharp turnaround in FY22, when the COVID-19 crisis is over. Das said RBI's mission is to do whatever can be done to overcome the pandemic impact. He appreciated doctors, police and every other department that has been on the frontline in the ongoing battle against this disease.

“Global financial markets remain volatile and crude oil prices remain in a flux. In fact, crude oil prices remain in a state of flux despite production cuts by OPEC. India is expected to post sharp turnaround by growing at 7.4 percent in FY22, as per IMF,” Das said. 

He said that India is handful of the countries to have a positive growth this year, according to IMF.

“On April 14, International Monetary Fund (IMF) released its global growth projections revealing that in 2020, the global economy is expected to plunge into the worst recession since 'The Great Depression',” he said.

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“Macro landscape has deteriorated in some areas, but light shines through in others. In fact, macro-economic financial landscape has deteriorated precipitously in some areas since our last address. even then, India is amongst the handful of countries to have positive GDP growth this year,” Das added.

He said that humanity is facing a trial during the COVID 19 crisis and Reserve Bank of India (RBI) has been very proactive in monitoring the situation closely.

"To allow banks to use this surplus into economy, reverse repo rate is being reduced by 25 bps from 4% to 3.75% under Liquidity adjustment facility (LAF)," Das said, while briefing about steps taken by RBI. 

He said that RBI undertook three long-term repo operations (TLTRO) to ease liquidity constraints. The TLTRO option of Rs 25000 crore is to be conducted today (April 17), Das said. 

"In response to these auctions, financial conditions have eased considerably and activity in corporate bond market has picked up. redemption pressure faced by mutual funds have also eased. RBI has been constantly monitoring situation and in our effort to see financial system is fully functional, we will announce additional measures," he said.

Das said that this is not the last announcement being made by the RBI and further measures will be taken as the situation demands.