Inflation could decline further, settle below 4% by H2FY21, says Shaktikanta Das

Inflation could decline further, settle below 4% by H2FY21, says Shaktikanta Das

Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday (April 17) addressed the media. This is the RBI Governor's second press briefing since the coronavirus COVID-19 outbreak began in India. In his previous address on March 27, he had announced a rate cut of 75 basis points.

Key take away from RBI governor Shakthikantadas today’s address :

  1. LCR requirement of banks brought down to 80% from 100%; to be restored in phases by April next year.
  2. Banks not to make any further dividend payout in view of financial difficulties arising from COVID-19.
  3. 90-day NPA norm not to apply on moratorium granted on existing loans by banks.
  4. Repo rate remains unchanged.
  5. Economic activity came to standstill during the lockdown.
  6. Ways and means a limit of states raised to help them, not bunch up their borrowing plans.
  7. Rs 50,000 cr special finance facility to be provided to financial institutions such as Nabard, Sidbi, NHB.
  8. RBI to announce new measures to maintain adequate liquidity in the system, facilitate bank credit flow, ease financial stress.
  9. Surplus liquidity in the banking system has increased substantially as a result of central bank actions.
  10. No downtime of the internet or mobile banking during lockdown; banking operations normal.
  11. The contraction in exports in March at 34.6% much more severe than the global financial crisis of 2008-09.
  12. Automobile production, sales declined sharply in March; electricity demand has fallen sharply.
  13. Impact of COVID-19 not captured in IIP data for February.
  14. India is expected to post a sharp turnaround in 2021-22. IMF projection of 1.9% GDP growth for India is highest in G20.
  15. Banks, financial institutions have risen to occasion to ensure normal functioning during the outbreak of the pandemic.
  16. RBI monitoring situation developing out of COVID-19 outbreak.
  17. LTRO-2.0 to involve Rs 50,000 cr to begin with.
  18. For 2020-21, International Monetary Fund projects sizable reshaped recoveries, close to 9 percentage points for the global GDP. India is expected to post a sharp turnaround & resume its pre-COVID, pre-slowdown trajectory by growing at 7.4% in 2020-21.
  19. Since March 27, the macroeconomic and financial landscape has deteriorated precipitously in some areas, but light still shines through bravely in some others.