RBI Announces 50,000 Cr for Emergency Health Sector; Next G-SAP Auction Advanced

During the unscheduled meeting today Wednesday, RBI Governor Shaktikanta Das thanked the country's Covid Warriors such as doctors, nurses, other healthcare workers, and police personnel for their selfless efforts in fighting the pandemic and saving lives. 

RBI would continue to monitor the emerging COVID19 situation and would deploy all resources and instruments at its command especially for the citizens, business entities, and institutions beleaguered by the second wave, he adds. 

Governor Shaktikanta said the central bank has decided that the second purchase of government securities (G-SEC) of 35,000 crore under G-SAP 1.0 has been postponed 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. 

Under this the Banks would open a Covid loan bank which shall be classified as priority sector lending. The Small Finance Banks (SFBs) are now permitted to regard fresh on-lending to microfinance institutions (MFIs) with asset size up to 500 crore, as priority sector lending; this facility would be available until 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 Shaktikanta further adds. 

An extended helping hand is provided to MSME and unorganised sector businesses, special long-term (3-year) repo operations of 10,000 crore for fresh lending by SFBs up to 10 lakh per borrower has been allowed up to October 21, 2021.

On global macro economic growth outlook, Shaktikanta said that the global economic outlook is "highly uncertain and clouded with downside risks".

On the domestic front, RBI doesn't expect any broad deviation from its economic forecast made in February, further details would be made available during the forthcoming monetary policy review that is due in the first week of June 2021, he said.

"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," says.

The inflation for the outstanding year will be influenced by COVID-19 restrictions, and may not have much variation from the earlier 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 spill overs, the RBI Governor further added.

Highlighting the economic indicators, Das said rail freight registered a growth of over 76 percent year-on-year in April, 2021 which comes on low base of last year. Toll collections shows mobility declined unlike an halt during first wave of covid19 during April 2020.

The registration of Automobiles shown moderation in April 2021 as compared to March. The tractor segment continues vigorously towards robust rural economy despite the slowdown in urban growth.