Indian Economy News & Discussion - Nov 27 2017

Rishirishi · Post by **Rishirishi** » 17 Mar 2020 03:45

Picklu wrote:With the WFH being the new norm, TCS alone has ordered 2+lakh laptop, all coming from China; CTS another 1+ lakh, add Wipro, Infy and rest of the IT behemoths and China is laughing all the way to bank.

Add the biffed up routers, dongles and new phone handsets required for WFH and we alone are taking care of all their export slacks due to WuhanVirus!!!

It is a worldwide thing. Vent yesterday to a large electronics superstore. They usually have hundreds of monitors in stock. Only had 4 gaming monitors. USB hubs were all sold out.

disha · Post by **disha** » 17 Mar 2020 04:30

https://swarajyamag.com/economy/central ... its-chance

I totally agree with the above article. A significant rate cut from RBI will actually jump-start the economy post corona virus pandemic.

GOI can under 'hardship' announce new schemes to boost economy:

1. Like all registered help in restaurants will get Rs. 1000/- per month for 3 months.
2. All registered restaurant owners will get Rs. 10000/- per month for 3 months to defray closings.
3. Same for theatre and cinema industry
4. Same for any public gathering centers that are for profit.
5. All farmers get a 3-month boost to input irrigation tech in their farms over summer (April/May/June)

All of that requires taking a one-time charge and pushing that money into the hands of the people to jump-start the economy. For that GOI has to borrow and lowered interest rates help.

Karan M · Post by **Karan M** » 17 Mar 2020 11:08

Coronavirus outbreak: Preemptive measures in place to ensure no disruption to supply chains: Sanjeev Sanyal

Read more at:
https://economictimes.indiatimes.com/ht ... aign=cppst

Karan M · Post by **Karan M** » 17 Mar 2020 11:09

India, US explore joint strategy in containing Covid-19

G20, or the world’s top 20 economies, including India, had met in Riyadh on Thursday last week and decided to enhance cooperation and coordination to contain the Covid-19 pandemic, protect people, mitigate the economic impact and maintain economic stability while avoiding stigmatisation, ET had first reported on Saturday.

Read more at:
https://economictimes.indiatimes.com/ne ... aign=cppst

Rahulsidhu · Post by **Rahulsidhu** » 17 Mar 2020 18:54

The (in-) action of MoF and RBI in the face of the greatest economic threat in a generation is going to go down as a shameful chapter in the history of Indian economic policy-making. Sounds hyperbolic, but it's true.

I did not have my expectations set high - but hiking taxes in the face of mass shutdowns and a pandemic?? WTH. Are these people living under a rock?

Karan M · Post by **Karan M** » 18 Mar 2020 02:17

Rahul - get to twitter and start messaging Sanjiv Sanyal. I have very little hopes on the rest of the folks. But identify key folks from the decision making structure and reach out to them. I am not kidding - you may well have an effect.

anmol · Post by **anmol** » 18 Mar 2020 13:38

Rahulsidhu wrote:The (in-) action of MoF and RBI in the face of the greatest economic threat in a generation is going to go down as a shameful chapter in the history of Indian economic policy-making. Sounds hyperbolic, but it's true.

I did not have my expectations set high - but hiking taxes in the face of mass shutdowns and a pandemic?? WTH. Are these people living under a rock?

Maybe the priority currently is not the economy. Priority is to contain the virus. And pretty much everyone is doing this by trying their level best to flatten the curve by basically reducing all kinds of activity which in turn WILL reduce economic activity.

It would be pretty dumb to shut down schools, offices, restaurants, malls, multiplexes, temples, trains, social gatherings... policy measures that lowers economic activity, and then nullify it by policy measures that can boost economic activity.

I am not an expert, but IMVHO they have chosen to reduce economic activity. There will be recession, we can deal with it, we will deal with it. That is much better than dealing with number of sick outnumbering hospital beds, ventilators, etc.

Bart S · Post by **Bart S** » 18 Mar 2020 15:11

anmol wrote:
Rahulsidhu wrote:The (in-) action of MoF and RBI in the face of the greatest economic threat in a generation is going to go down as a shameful chapter in the history of Indian economic policy-making. Sounds hyperbolic, but it's true.

I did not have my expectations set high - but hiking taxes in the face of mass shutdowns and a pandemic?? WTH. Are these people living under a rock?
Maybe the priority currently is not the economy. Priority is to contain the virus. And pretty much everyone is doing this by trying their level best to flatten the curve by basically reducing all kinds of activity which in turn WILL reduce economic activity.

It would be pretty dumb to shut down schools, offices, restaurants, malls, multiplexes, temples, trains, social gatherings... policy measures that lowers economic activity, and then nullify it by policy measures that can boost economic activity.

I am not an expert, but IMVHO they have chosen to reduce economic activity. There will be recession, we can deal with it, we will deal with it. That is much better than dealing with number of sick outnumbering hospital beds, ventilators, etc.

https://newsd.in/no-impact-on-indian-ec ... ag-thakur/
No impact on Indian economy due to COVID-19: Anurag Thakur

anmol · Post by **anmol** » 18 Mar 2020 15:24

Bart S wrote:No impact on Indian economy due to COVID-19: Anurag Thakur

“However, the latest available data on trade and indicators of domestic output do not suggest any adverse impact on the economy,” he said.

Probably, data on trade and on domestic output was showing no major effect of covid-19. This may change.

Also, do you expect policy makers to come out and say that "what we are doing will cause recession, and that is the plan" ?

Bart S · Post by **Bart S** » 18 Mar 2020 15:58

anmol wrote: Also, do you expect policy makers to come out and say that "what we are doing will cause recession, and that is the plan" ?

Yes, that is exactly what they should be doing. Clarity and clear communication is absolutely critical.

Kaivalya · Post by **Kaivalya** » 18 Mar 2020 18:53

^^^

I am afraid the pessimist in me thinks - our data gathering and reporting on economic activity is so dismal that the entire effect of Corona virus will not be noticed.

Worst case scenario data will get changed downward retroactively in a quarter or so.

It is hard to say if that is better or khanland election politics recommending 2000$ handout for everyone due to Corona virus and 850 billion $ ask

Bart S · Post by **Bart S** » 18 Mar 2020 19:16

Kaivalya wrote:^^^

I am afraid the pessimist in me thinks - our data gathering and reporting on economic activity is so dismal that the entire effect of Corona virus will not be noticed.

Worst case scenario data will get changed downward retroactively in a quarter or so.

It is hard to say if that is better or khanland election politics recommending 2000$ handout for everyone due to Corona virus and 850 billion $ ask

Outside of talking heads and elites nobody cares about the kind of data that you are referring to. If there is a protracted lockdown due to Chinese Virus, it will absolutely be noticed by the people who matter - the majority of the population! Small businesses, daily wage/self-employed/informal sector workers are already suffering and will start to be badly affected after a few days.

Kaivalya · Post by **Kaivalya** » 18 Mar 2020 19:54

Bart S wrote:
Kaivalya wrote:^^^

I am afraid the pessimist in me thinks - our data gathering and reporting on economic activity is so dismal that the entire effect of Corona virus will not be noticed.

Worst case scenario data will get changed downward retroactively in a quarter or so.

It is hard to say if that is better or khanland election politics recommending 2000$ handout for everyone due to Corona virus and 850 billion $ ask
Outside of talking heads and elites nobody cares about the kind of data that you are referring to. If there is a protracted lockdown due to Chinese Virus, it will absolutely be noticed by the people who matter - the majority of the population! Small businesses, daily wage/self-employed/informal sector workers are already suffering and will start to be badly affected after a few days.

Understand the pain felt by common people /small businesses bartji.Did not mean to sound elitist or diminish the pain. Policy has to be driven by data which is sorely lacking. The only other available lever is to reduce the interest rate which hides/prolongs funny loans that have been given in the past (like the kind yes bank gave to default 18,000 odd crore )

None of the options in the table are without hazards. I am just hoping that the lowering of oil price will offset the economic difficulty faced by people. I saw reports that we are filling up our reserves quickly. Hopefully we can build more , capitalize and pass the benefits to the common man. That will drive the economy faster

Bart S · Post by **Bart S** » 18 Mar 2020 20:20

Kaivalya wrote:
Understand the pain felt by common people /small businesses bartji.Did not mean to sound elitist or diminish the pain. Policy has to be driven by data which is sorely lacking.

My post wasn't directed at you, and you are right that data is important. What I was pointing out is that there is a huge disconnect between the 'economic data analysis' folks and the common folks who couldn't care less for the data/stats but will feel direct impact. This is probably a reversal from earlier where the media and darbari economists used to cry bloody murder all the time but that had no resonance with the common person/voter on the ground.

Suraj · Post by **Suraj** » 18 Mar 2020 22:33

It is a fair point that data collection mechanisms in India are still poorly funded. The US learned its lesson during the Great Depression when they flew blind with no idea of the impact of deflation on the economy. We're not that badly off, but I've criticized the functioning of MOSPI/CSO here on the econ threads since about 2005. They've been far behind the curve for a long time, and I prefer direct metrics and surveys (company sales, export/FDI data, PMI) to indexed statistics (IIP, CPI, GDP).

Someone like Anurag Thakur needs to be careful with responses in RS. However, I'll give him the benefit of doubt because he's being quoted in press, and I'd rather see his original RS Question Hour response to comment.

Rahulsidhu · Post by **Rahulsidhu** » 19 Mar 2020 05:29

Karan M wrote:Rahul - get to twitter and start messaging Sanjiv Sanyal. I have very little hopes on the rest of the folks. But identify key folks from the decision making structure and reach out to them. I am not kidding - you may well have an effect.

Thanks for the suggestion Karan, the same idea crossed my mind a few times. Maybe a long email may be more appropriate. Will try to write something up this weekend hopefully. May just be like screaming into a void but sometimes that can be mentally helpful

On that note, let me say that I do not share your optimism about Sanjeev. From the public comments I have seen from him, he is a Schumpeterian/Austrian, which suggests to me that he is one of the leading proponents of the no-intervention stance. I do not claim to know what he thinks, but this is just my impression, so apologies to Shri Sanyal in advance if my impression is incorrect.

Rahulsidhu · Post by **Rahulsidhu** » 19 Mar 2020 05:33

anmol wrote:
Rahulsidhu wrote:The (in-) action of MoF and RBI in the face of the greatest economic threat in a generation is going to go down as a shameful chapter in the history of Indian economic policy-making. Sounds hyperbolic, but it's true.

I did not have my expectations set high - but hiking taxes in the face of mass shutdowns and a pandemic?? WTH. Are these people living under a rock?
Maybe the priority currently is not the economy. Priority is to contain the virus. And pretty much everyone is doing this by trying their level best to flatten the curve by basically reducing all kinds of activity which in turn WILL reduce economic activity.

It would be pretty dumb to shut down schools, offices, restaurants, malls, multiplexes, temples, trains, social gatherings... policy measures that lowers economic activity, and then nullify it by policy measures that can boost economic activity.

I am not an expert, but IMVHO they have chosen to reduce economic activity. There will be recession, we can deal with it, we will deal with it. That is much better than dealing with number of sick outnumbering hospital beds, ventilators, etc.

Please, do a basic survey of the major economies around the world. India is not in a unique position with the problem, but India is unique in its response, namely that there is no economic dimension to it. While all govts. and monetary authorities are in a whatever-it-takes mode, Indian authorities are doing nothing except to regularly promise us that they are watching closely. Cold comfort.

So please, do this little research and then we may be able to have a more informed discussion.

Rahulsidhu · Post by **Rahulsidhu** » 19 Mar 2020 05:48

I will quickly add why I disagree with the no-intervention thinking. The non-interventionists believe that shocks are bad but they make us (the economy) robust and thus good in the long term - by getting rid of the less efficient and re-allocating capital to the more efficient. So let the private sector sort out this mess itself.

Here is why I don't agree with this thinking:

1) Financial capital is not limited, so it does not need to be rationed out. The question of less vs more efficient can be sorted out by free markets in normal times.
2) Small shocks are OK, they do make the system robust. Large shocks need intervention and stabilization or it leads to permanent damage.
3) A high growth/low unemployment economy with periodic crises is better than a slow growth/high unemployment economy even if the latter is more robust.
4) Bubbles are not always bad. Bubbles are the only time extraordinary, moonshot projects get funded and society's frontiers expand.
5) Sound finance/lower budget deficit should not be a goal. The needs of the real economy, especially employment, should dictate financial policies and not the other way round, i.e. we shouldn't keep employment low just to keep inflation or deficits lower.

sivab · Post by **sivab** » 19 Mar 2020 06:33

Suraj wrote: Someone like Anurag Thakur needs to be careful with responses in RS. However, I'll give him the benefit of doubt because he's being quoted in press, and I'd rather see his original RS Question Hour response to comment.

disha · Post by **disha** » 19 Mar 2020 06:58

I had disagreements with you in past and do not totally agree with your line of thought., Though

Rahulsidhu wrote:The (in-) action of MoF and RBI in the face of the greatest economic threat in a generation is going to go down as a shameful chapter in the history of Indian economic policy-making. Sounds hyperbolic, but it's true.

The above is very very very apt. Currently, RBI has gone comatose.

nachiket · Post by **nachiket** » 19 Mar 2020 10:00

disha wrote:I had disagreements with you in past and do not totally agree with your line of thought., Though

Rahulsidhu wrote:The (in-) action of MoF and RBI in the face of the greatest economic threat in a generation is going to go down as a shameful chapter in the history of Indian economic policy-making. Sounds hyperbolic, but it's true.

The above is very very very apt. Currently, RBI has gone comatose.

Can't put the full blame on RBI. A GST rate cut or slab rationalization would go over very well right now. In fact it would have been necessary even without the Covid-19 related slowdown/recession. But the govt. has gone ahead and actually increased rates for some items. Like Rahul said, they seem to be living under a rock and the RBI did not send them there.

The buck stops at Sitharaman and eventually Modi.

Karan M · Post by **Karan M** » 19 Mar 2020 10:19

Rahul - even if its not Sanjeev Sanyal, reach out to others. Write up a paper, who knows you may be contacted to present your ideas. And you should.

Please just don't limit yourself to this forum. Many of us, want this GOI to succeed, and as such we at times may just be dismissed by folks who too are in the same boat and hence take even constructive critique as some sort of attack on GOIs competence. "We know all this", "Do you think people doing this aren't intelligent" etc. The fact is they aren't omnipotent and do make mistakes. They need to be messaged the right info in a way that doesn't rub folks off the wrong way.

I am brazen enough by now that I ignore it and repeat my ideas.

I can assure you that the ideas I contributed or came up with, two - three times what I have reached out to folks about, "surprisingly" made a mention elsewhere.

No acknowledgement etc but then again, I don't care about that. I was intent on making sure decision makers or anyone else involved had the right info at hand and that I contributed productively.

Net, do what you have to. All hands on deck.

kit · Post by **kit** » 19 Mar 2020 13:46

How can others help, any ideas ? Mass petitions ? Tweets ?

Karan M · Post by **Karan M** » 19 Mar 2020 14:11

Take proper ideas, structure them well, be as polite as possible, and send it across by twitter, email etc. Use references wherever possible.

Kaivalya · Post by **Kaivalya** » 23 Mar 2020 19:48

Green shoots after Wuhan lockdown, economic policy and manufacturing push

https://www.livemint.com/news/india/how ... 60343.html

sanjaykumar · Post by **sanjaykumar** » 24 Mar 2020 03:34

Interesting effects of policy.

https://www.livemint.com/news/india/how ... 60343.html

SRajesh · Post by **SRajesh** » 25 Mar 2020 17:16

https://youtu.be/CvlU-Yqf-EM
Here we go the JNU gang have started hollering!!
Wait for the liberandus to pick it up and start a chain reaction
Hope this is nipped in the bud and they don't start a public revolt and add the COIVD-19 Crisis!!
God save the country if that happens.

tandav · Post by **tandav** » 25 Mar 2020 19:45

Rsatchi wrote:https://youtu.be/CvlU-Yqf-EM
Here we go the JNU gang have started hollering!!
Wait for the liberandus to pick it up and start a chain reaction
Hope this is nipped in the bud and they don't start a public revolt and add the COIVD-19 Crisis!!
God save the country if that happens.

The points being made are true. Extended shutdowns will affect supply chains. Do the people of India have enough discipline to think about others well being and not just their own. In a few days as information trickles in The government will move to mitigate some of the effects of the complete shutdown, allowing critical activity like logistics and food supply to ramp up.

SRajesh · Post by **SRajesh** » 25 Mar 2020 21:24

^^ Agree
I was more alluding to the scare mongering and the chain reaction!!
A cloistered public with a large portion of daily wages earners and top of that this sort public discourse will sure lead to chaos!!
Rather than dissing the GOI would have been better with 10 points for improvements or what the GOI could do to alleviate the crisis.
That would have lead to multiple inputs to the GOI in announcing an economic/relief package.

kit · Post by **kit** » 25 Mar 2020 22:32

Rsatchi wrote:https://youtu.be/CvlU-Yqf-EM
Here we go the JNU gang have started hollering!!
Wait for the liberandus to pick it up and start a chain reaction
Hope this is nipped in the bud and they don't start a public revolt and add the COIVD-19 Crisis!!
God save the country if that happens.

Anyone starting rumours or false news through any media can relax in jail for a year, hope the police make good use of it

Krita · Post by **Krita** » 26 Mar 2020 00:50

Rsatchi wrote:https://youtu.be/CvlU-Yqf-EM
Here we go the JNU gang have started hollering!!
Wait for the liberandus to pick it up and start a chain reaction
Hope this is nipped in the bud and they don't start a public revolt and add the COIVD-19 Crisis!!
God save the country if that happens.

Mass report it for spamming or spreading violent content in youtube.

arshyam · Post by **arshyam** » 26 Mar 2020 18:58

'No one will go hungry': Rs 1.70 lakh crore to help poor during coronavirus lockdown - TNIE

NEW DELHI: Finance Minister Nirmala Sitharaman announced a stimulus package worth Rs 1.70 lakh crore including Direct Benefit cash transfers, free LPG, grains and pulses for the poor while the middle class will be able to withdraw funds from their Employees Provident Fund (EPF) account to give all of them some respite during the coronavirus lockdown.

"A package is ready for the poor who need immediate help like migrant workers and urban and rural poor. No one will go hungry. The package is worth Rs 1.7 lakh crore and will include a mix of food security and direct cash transfer benefits, which shield poor families during the lockdown. This will be done under the Pradhan Mantri Gareeb Kalyan Ann Yojna," Sitharaman said.

The first measure was to immediately release the first instalment of the direct cash transfer to farmers under the PM Kisan Yojna.

"8.69 crore farmers to be immediately benefited through Direct cash transfers. Instalment of Rs 2000 in the first week of April will be transferred," Sitharaman announced.

Wages under MNREGA will also be increased by Rs 2000 per worker on an average as additional income to help daily-wage labourers.

Under the Pradhan Mantri Gareeb Kalyan Ann Yojna (PMGKAY), announced for the for next three months, at least 80 crore poor people will be covered. Under the scheme, an additional five kilos of rice/wheat will be given along with 1 kilo of pulses per household.

Ujjwala beneficiaries, meanwhile, will get free cooking gas (LPG) cylinders in the next three months, which will benefit 8.3 crore BPL families.

The finance minister also announced that three crore senior citizens and women will be covered under the Divyang scheme, under which a one-time additional amount of Rs 1000 in two instalments will be given through Direct Benefit Transfers over a period of three months.

She also announced that 20 crore Jan Dhan women account holders will be covered under the relief package and a compensation of Rs 500 per month will be offered to them for the next three months.

Apart from this, to help the construction workers, the finance minister said the central government has given orders to state governments permission to use funds of Rs 31,000 crore lying with them.

For the organised sector, she said that government will pay EPF contribution, both of employer and employee, for three months for all those establishments with less than 100 employees out of which 90 per cent earn less than Rs 15,000 per month.

She also announced a Rs 50 lakh insurance cover for each healthcare worker for three months.

All the schemes come into effect immediately. People will get benefits from April 1.

She added that this announcement is to help in cushioning the poor and the government will announce more measures when required.

When asked about the relief given to the industries, she replied that "we will come back when we have something for them".

The expectations of this relief package had been building up since last week.

The key announcements:

Senior citizens and widows: An additional ex-gratia amount of Rs 1,000 for the next three months in two instalments. It will benefit 3 crore widows and senior citizens.

Women Jan Dhan account holders: An ex-gratia of Rs 500 per month for the next three months. To benefit 20 crore women.

Women Ujjawala scheme beneficiaries: Free cylinders for women under this scheme for the next three months. Will benefit 8.3 crore below poverty line families.

Women Self Help Groups: A collateral free loan of up to Rs 20 lakh will be given to SHGs under the Deen Dayal National Livelihood Mission. 7 crore households expected to benefit through 63 lakh SHGs.

Farmers: Farmers covered under the PM Kisan scheme will be given the first instalment of Rs 2,000 in the first week of April. About 8.69 crore farmers will benefit.

MNREGA: Wages to increase by Rs 2000 per worker every month. 5 crore families are expected to benefit.

Construction workers: States directed to utilise the welfare fund for building and construction labourers, which has around Rs 31,000 crore in its kitty.

Organised sector: The government will pay the EPF contribution of 24 per cent - of both the employer and the employee - for the next three months. This is for those establishments with up to 100 employees and where 90 per cent of them earn less than Rs 15,000. Also, EPFO regulations will be amended so that workers can draw up to 75 per cent for their contingency expenditure non-refundable advance or three months of wages in advance, whichever is lesser. Expected to benefit 4.8 crore workers.

Medical and testing activities: State governments have been directed to utilise the mineral fund for supplementing all types of medical screening activities necessary to contain the spread of COVID-19.

Insurance coverage: Insurance cover of Rs 50 lakh for healthcare workers who are putting their lives at risk and treating the coronavirus affected patients.

Pradhan Mantri Gareeb Kalyaan Ann Yojana: 80 crore poor people will get 5 kg of rice or wheat every month, in addition to the 5 kg announced by the Centre, for free. Also, 1 kg of pulses (according to regional preferences) will be given to each household for the next three months. This can be availed in two instalments.

Mollick.R · Post by **Mollick.R** » 27 Mar 2020 10:42

Finally RBI cuts the rate

Repo rate reduced by 0.75% to 4.4%
Reverse Repo rate reduced by 0.90% to 4.0%

Decision take by 4 yes to 2 nos.

Cheers.

Good to see Market responding to it.

James · Post by **James** » 27 Mar 2020 13:24

More than the rate cut, various measures to pump in liquidity into the system and also 3 months moratorium on term loans will have a bigger positive impact. Still the markets are off their intraday highs reached prior to the announcement, but that can be expected after yesterday’s smart gains.

https://www.rbi.org.in/Scripts/BS_Press ... prid=49581

https://www.rbi.org.in/Scripts/BS_Press ... prid=49582

Bart S · Post by **Bart S** » 27 Mar 2020 17:19

What is a 'term loan' in this context? Do common consumer loans like home loans and car loans fall in this category?

Also, the RBI has simply said that banks are allowed to defer EMIs but unclear right now if banks, especially private ones will actually do it.

arshyam · Post by **arshyam** » 27 Mar 2020 18:36

Jaggi's take, worth posting in full:

RBI Gets The Bazookas Out: Message To Banks Is Lend, Lend, Lend, Lower Rates - R Jagannathan, Swarajya - Mar 27, 2020, 12:23 pm

The Narendra Modi government has brought out the big bazookas now. Three days after locking down the whole country for 21 days to contain the Covid-19 virus, it has now started unleashing massive fiscal and monetary firepower to prevent a financial and economic meltdown.

Yesterday (26 May), Finance Minister Nirmala Sitharaman announced a Rs 1.7 lakh crore fiscal spending programme to reach food and cash to the most vulnerable sections of society, including migrant workers, women and senior citizens.

Today (27 March), the Reserve Bank of India (RBI) Governor, Shaktikanta Das, literally opened the vaults of the central bank to the financial system so that they can go out and lend, lend, and lend.

In one fell swoop, Das has cut repo rates by 75 basis points (100 basis points make one per cent), slashed the cash reserve ratio by 1 per cent to 3 per cent, and opened the floodgates for ensuring liquidity and credit to all segments of society. Together with a massive expansion of its long-term repo operations (LTRO), today’s measures will unleash liquidity worth Rs 374,000 crore in the coming months.

Add the Rs 280,000 crore of liquidity already unleashed earlier this year, what the RBI has done is expand liquidity worth nearly 3.2 per cent of gross domestic product (GDP) in just a few weeks’ time. (Read Governor Das’s full statement here).

If making money available can help us with the pandemic, Das is the right man for the job.

Simultaneously, regulatory requirements have been eased, with term lenders, including home loan companies, being asked to give three months’ moratorium to borrowers. Working capital accounts are being given a similar relief for interest payments due as of 1 March 2020.

This implies that even if a company does not service its loans, for at least three months the account will not be labelled as “non-performing”. Working capital will also be given more liberally with lower margin requirements for the borrower.

The message to banks and the financial system is this: this is not the time to worry about bad loans. This is the time to grow the loan book even if it means taking huge risks with the quality of the lending.

The same message came from the Finance Minister yesterday when Nirmala Sitharaman said self-help groups will be given collateral free loans of upto Rs 20 lakh. Mudra loans will also be ramped up.

The RBI today backed up the lend, lend, lend message by widening the gap between the repo and reverse repo rates from 0.25 per cent to 0.4 per cent. This means the RBI will lend to banks at 4.4 per cent, but accept deposits from them only at 4 per cent.

This means banks are being goaded to go and lend rather than idly park their excess deposits with the central bank. They will also be asked to lend more to companies by buying up commercial paper, thus opening up an indirect line of funding for non-banks and others.

The implications of today’s monetary policy announcements are huge: both deposit rates and lending rates will fall as banks begin to ramp up lending; borrowers will get relief both on rates and repayment periods, and this includes retail borrowers who have to pay auto and home loan EMIs (equated monthly instalments), for upto three months.

The non-bank financial companies will get the kind of lifelines that they didn’t get earlier. They are being indirectly fused to the main banking system.

The RBI’s stellar performance during this time of crisis needs to be commended, for it has managed to extricate the Monetary Policy Committee (MPC) from its narrow-minded focus on inflation and think about growth and other challenges. Governor Das managed to wake up the committee and got them to agree to bring forward the scheduled meeting from 31 March-3 April to 24-27 March – an advancement of a week.

Even better, Das has been able to make the MPC fairly redundant this time around, with many of the steps announced to improve liquidity having an indirect impact on lending rates. He has told the MPC that he can do things they never can, so they had better fall in line.

The RBI, as Governor Das said in his televised address today, is in “mission mode”. It will do whatever it takes to “mitigate the economic impact of Covid-19 and preserve financial stability…. (and) all instruments – conventional and unconventional – are on the table.”

Das also assured the public that bank deposits are safe.

He said:

The Indian banking system is safe and sound. In the recent past, Covid-19-related volatility in the stock market has impacted share prices of banks as well, resulting in some panic withdrawal of deposits from a few private sector banks. It would be fallacious to link share prices to safety of deposits. As I have mentioned in my earlier interaction with the media, depositors of commercial banks, including private sector banks, need not worry on the safety of their funds. I would, therefore, urge members of the public as well as the public authorities, who have deposits in private sector banks, not to resort to any panic withdrawal of their funds.

By public authorities he meant temples, charitable trusts and even state governments, who are busy destabilising private sector banks by withdrawing large amounts of their cash in the pursuit of safety.

This is the closest the RBI has ever come to telling depositors that it stands four-square behind deposits even though the actual amounts insured with the Deposit Insurance and Credit Guarantee Corporation do not exceed Rs 1 lakh per account.

Das’s performance is a telling reminder that India’s central banker needs to have open lines of communication with the Centre and an open mind on issues beyond just inflation. He has already done far better than his globally known predecessors, Raghuram Rajan and Urjit Patel. He is probably the Modi government’s best insurance against Covid-19 becoming a financial pandemic.

Jagannathan is Editorial Director, Swarajya. He tweets at @TheJaggi.

Mollick.R · Post by **Mollick.R** » 27 Mar 2020 21:13

Bart S wrote:What is a 'term loan' in this context? Do common consumer loans like home loans and car loans fall in this category?

Also, the RBI has simply said that banks are allowed to defer EMIs but unclear right now if banks, especially private ones will actually do it.

Sir, hope this helps............

RBI's EMI moratorium: Will my installment be deducted, are credit card bills suspended and other questions answered
Updated : March 27, 2020 05:10 PM IST

* The RBI today allowed banks to offer a moratorium on all term loans.
* The step was taken in light of the COVID-19 outbreak and the subsequent lockdown

pdate: A previous version of this copy said credit card dues were not covered under the RBI's moratorium. This has, however, been changed to reflect new information that has come to light after the RBI's guidelines were issued. Other changes have also been made to the copy to update fresh information.

The Reserve Bank of India (RBI) today allowed all financial institutions to allow a three-month moratorium for all term loans in light of the COVID-19 outbreak and the subsequent lockdown.

In effect, banks can allow all customers to not pay their monthly EMIs for a 3-month period, and the non-repayment will not hurt their credit score.

Here are all questions on this decision answered.

Q: My EMI is due soon. Will the payment not be deducted from my account?

A: The RBI has said it has permitted allowed banks to extend a moratorium.

"Lending institutions shall frame board-approved policies for providing the abovementioned reliefs to all eligible borrowers," the RBI later said in its guidelines.

This means that individual banks will have to frame policies allowing relief to customers. Whether it will cover all customers or only customers that request for relief will be decided by individual banks.

However, SBI chief Rajnish Kumar in a conference call said that all EMIs on term loans stand cancelled.

Q: Will non-payment result in impact on my credit score?

A: Once relief has been granted by your bank, non-payment will not result in any impact on credit score.

Q. Which banks can offer this deferment to their customers?

A: All commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, all-India Financial Institutions, and NBFCs (including housing finance companies and micro-finance institutions) can extend the moratorium.

Q. Is this a waiver of EMIs or a deferment of EMIs?

A: This is not a waiver, but a deferment. RBI has recommended that the repayment schedule and all subsequent due dates as also the tenor for such loans may be shifted across the board by 3 months.

"Interest shall continue to accrue on the outstanding portion of the term loans during the moratorium period," the RBI said in its guidelines.

Q: Does this mean that I will have to pay all 3 EMIs at one go in June?

A: Unlikely, as the RBI's statement suggests the tenor may be shifted. That is: the loan may end 3 months later than was originally slated. But more clarity is awaited on this.

Q: Does the moratorium cover both principal and interest?

A: Yes. It does. You will be exempt from payment of your entire EMI, including payment and interest for three months. This will be applicable on all loans outstanding as on March 1, 2020.

Q. What kind of loans does the moratorium cover?

A: The RBI policy statement explicitly mentions term loans, including agriculture term loans and crop loans besides retail loans.

Retail loans are typically home loans, personal loans, education loans, auto and any loans that have a fixed tenure. They also include consumer durable loans, such as EMIs on mobiles, fridge, TV etc

Q: Does the moratorium cover credit card payments?

A: While credit cards are defined as revolving credit and not term loans, the RBI's operational guidelines made it clear that credit card dues are also covered.

Q: Does the moratorium cover loans taken on credit cards?

A: The RBI guidelines do not address this specifically but since credit card dues are covered, it is likely that loans taken on credit card may also be covered.

Q: I have taken a project loan for setting up a factory. Can I not pay my EMI?

A: The RBI guidelines specifically mention retail loans. So a business loan is unlikely to qualify.

Q: What has the RBI announced for businesses?

A: The RBI has allowed deferment for interest payments for all working capital loans taken by businesses. This will be applicable in respect of all working capital facilities outstanding as on March 1, 2020. The accumulated interest for the period will be paid after the expiry of the deferment period. Moratorium/deferment will not be treated as change in terms and conditions of loan agreements and will not result in asset classification downgrade.

https://www.cnbctv18.com/economy/are-cr ... 571531.htm

Suraj · Post by **Suraj** » 27 Mar 2020 23:48

Mollick.R wrote:Finally RBI cuts the rate

Repo rate reduced by 0.75% to 4.4%
Reverse Repo rate reduced by 0.90% to 4.0%

Decision take by 4 yes to 2 nos.

Cheers.

Good to see Market responding to it.

It appears the RBI was told to wait until the lockdown was effectively implemented before announcing this massive rate cut. A good thing in my opinion. I withheld opinion on the original 'refusal to cut rates' in line with other central banks last week, because it was clear that GoI was planning an organized response. Announcing a rate cut before lockdown would have had a very confusing message - "ok, ramp up activity, ok now stop all activity" . Doing this during a lockdown enables banks to effectively work out how to transmit as much of the rate cut to actual retail and business customers as possible.

tandav · Post by **tandav** » 28 Mar 2020 22:31

We have written to all my NBFC lenders to defer my unsecured loan EMI (I don't know what is term loan or business loan, all I know is I have to pay EMI for the loan... something for next 3 months. We have never failed EMI payments in last 2 years... In anycase if they try to take money from the account it will bounce as there is no money. If it effs up my credit score there is little we can do... if we do not get paid in April I will have to let my employees go

Mollick.R wrote:
Bart S wrote:What is a 'term loan' in this context? Do common consumer loans like home loans and car loans fall in this category?

Also, the RBI has simply said that banks are allowed to defer EMIs but unclear right now if banks, especially private ones will actually do it.
Sir, hope this helps............

RBI's EMI moratorium: Will my installment be deducted, are credit card bills suspended and other questions answered
Updated : March 27, 2020 05:10 PM IST

* The RBI today allowed banks to offer a moratorium on all term loans.
* The step was taken in light of the COVID-19 outbreak and the subsequent lockdown

pdate: A previous version of this copy said credit card dues were not covered under the RBI's moratorium. This has, however, been changed to reflect new information that has come to light after the RBI's guidelines were issued. Other changes have also been made to the copy to update fresh information.

The Reserve Bank of India (RBI) today allowed all financial institutions to allow a three-month moratorium for all term loans in light of the COVID-19 outbreak and the subsequent lockdown.

In effect, banks can allow all customers to not pay their monthly EMIs for a 3-month period, and the non-repayment will not hurt their credit score.

Here are all questions on this decision answered.

Q: My EMI is due soon. Will the payment not be deducted from my account?

A: The RBI has said it has permitted allowed banks to extend a moratorium.

"Lending institutions shall frame board-approved policies for providing the abovementioned reliefs to all eligible borrowers," the RBI later said in its guidelines.

This means that individual banks will have to frame policies allowing relief to customers. Whether it will cover all customers or only customers that request for relief will be decided by individual banks.

However, SBI chief Rajnish Kumar in a conference call said that all EMIs on term loans stand cancelled.

Q: Will non-payment result in impact on my credit score?

A: Once relief has been granted by your bank, non-payment will not result in any impact on credit score.

Q. Which banks can offer this deferment to their customers?

A: All commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, all-India Financial Institutions, and NBFCs (including housing finance companies and micro-finance institutions) can extend the moratorium.

Q. Is this a waiver of EMIs or a deferment of EMIs?

A: This is not a waiver, but a deferment. RBI has recommended that the repayment schedule and all subsequent due dates as also the tenor for such loans may be shifted across the board by 3 months.

"Interest shall continue to accrue on the outstanding portion of the term loans during the moratorium period," the RBI said in its guidelines.

Q: Does this mean that I will have to pay all 3 EMIs at one go in June?

A: Unlikely, as the RBI's statement suggests the tenor may be shifted. That is: the loan may end 3 months later than was originally slated. But more clarity is awaited on this.

Q: Does the moratorium cover both principal and interest?

A: Yes. It does. You will be exempt from payment of your entire EMI, including payment and interest for three months. This will be applicable on all loans outstanding as on March 1, 2020.

Q. What kind of loans does the moratorium cover?

A: The RBI policy statement explicitly mentions term loans, including agriculture term loans and crop loans besides retail loans.

Retail loans are typically home loans, personal loans, education loans, auto and any loans that have a fixed tenure. They also include consumer durable loans, such as EMIs on mobiles, fridge, TV etc

Q: Does the moratorium cover credit card payments?

A: While credit cards are defined as revolving credit and not term loans, the RBI's operational guidelines made it clear that credit card dues are also covered.

Q: Does the moratorium cover loans taken on credit cards?

A: The RBI guidelines do not address this specifically but since credit card dues are covered, it is likely that loans taken on credit card may also be covered.

Q: I have taken a project loan for setting up a factory. Can I not pay my EMI?

A: The RBI guidelines specifically mention retail loans. So a business loan is unlikely to qualify.

Q: What has the RBI announced for businesses?

A: The RBI has allowed deferment for interest payments for all working capital loans taken by businesses. This will be applicable in respect of all working capital facilities outstanding as on March 1, 2020. The accumulated interest for the period will be paid after the expiry of the deferment period. Moratorium/deferment will not be treated as change in terms and conditions of loan agreements and will not result in asset classification downgrade.
https://www.cnbctv18.com/economy/are-cr ... 571531.htm

M_Joshi · Post by **M_Joshi** » 29 Mar 2020 00:25

Strange activity. India not stocking at this low crude price juncture.