VERY BALANCED AND CALIBRATED POLICY

The policy of today is very aligned with what the markets wanted. Maybe the only grouse they could have is that the GSAP is now being shared with the SDLs too and not just in GSAP 1.0 but also probably in the upcoming GSAP 2.0 of Rs.1.20 lakh crore.

It gave everything possible – maintained status quo, GSAP 2.0, extending support to the most distressed and managing forex in the best possible way. What needs to be done is coax people to borrow – really improving credit growth has become a priority. But then unless consumption demand does not pick up, credit growth will not happen – that most definitely cannot be blamed on the RBI!

From a macro economic perspective, the RBI was bang-on, especially the reaching out to all the direct human-contact industries which has been hit the most over the past 15 months.

What do need now is a health policy – a fastened vaccination policy. RBI has done all it can; no more fiscal or monetary – as we say time and again, unless vaccination picks up on a huge scale, every policy decision will come to a naught.

RBI has presented a very balanced and calibrated policy; applause and please take a bow Mr.Das.

Highlights of the policy:

MPC unanimously vote to keep rates unchanged – Repo Rate remains at 4%, MSF and Bank Rate at 4.25% and reverse repo at 3.35%.

Stance remains accommodative

GDP for FY22 reduced from 10.5% to 9.5%; expected at 18.5% (v/s 26.2% earlier forecast) for Q1; 7.9% (8.3%) for Q2; 7.2% (5.4%) for Q3 and 6.6% (6.2%) in Q4.

CPI at 5.1% for FY22; 5.2% in Q1, 5.4% in Q2, 4.7% in Q3 and 5.3% in Q4

Banks can now restructure loans up to Rs.50 crore, up from Rs.25 crore earlier.

Rs 36,545 crore liquidity infused in the industry.

RBI will purchase Rs 40,000 crore worth of securities under G-SAP 2.0 on June 17

Rs 1.20 trillion worth of government securities to be purchased in Q2 – date and details to be announced later

Forex reserves have already exceeded $600 bn

Opening a Rs 15,000 crore On-Tap Liquidity Window at repo rate for contact intensive sectors

Support to restaurants, tour operators, conference organisers, spas, beauty parlours, bus operators, aviation ancillaries, – to provide loans at a rate 25 bps lower that RBI's repo rate.

Special liquidity facility of Rs 16,000 crore to Sidbi to support MSMEs extended

Rural regional banks can now issue certificates of deposit