RBI Governor Mr. Shaktikant Das gave another booster of 1 Lac crore.
The key points surely are: –
1. 50,000 Cr to banks’ lending to NBFCs through TLTRO operations building liquidity space for small NBFCs
2. Special refinancing facility of 25,000 Cr to NABARD, 15,000 Cr to SIDBI, and 10,000 Cr to NHB for lenders to Agriculture, Small Industries and Housing Finance Companies
3. Reverse Repo Rate cut by 25 basis points from 4 % to 3.75 % motivating banks to lend.
4. Scheduled commercial banks and Cooperative banks barred from paying dividends for FY 20 help banks conserve capital and absorb credit loses
However, I am thrilled with the way the Govt and RBI are managing Lives & Livelihoods.
The RBI has already injected about 4.75 Lac crore of liquidity into the system and banks are flush with funds. This is also visible from the fact that the banks are depositing close to 6.9 Lac crore of liquid money with RBI. The reduction of the reverse repo rate is a super step to motivate banks to lend to markets to fuel economy
What I Read from the RBI Policy in Conjunction with An Attempt to Save Jobs
If you carefully follow the steps RBI and Govt took to sustain the eco-system you will notice that starting from the bottom of the pyramid to every step towards the top is being taken care of.
The Govt by virtue of DBT (Direct Benefit Transfer) put money into the underprivileged accounts so that they could sustain their livelihood because this is the class that works and earns every day. This was the first step (Addressing the SOS call)
HOW RBI MEASURES WILL CURTAIL JOB LOSS …
· RBI has injected 25,000 Cr into NABARD to help agriculture (to facilitate procurement of RABI crops) and rural development. Also, Lockdown 2.0 allows (from 20th April) harvesting, construction in rural areas, and manufacturing so as to preserve the jobs of people.
· 15,000 Cr to SIDBI to help small manufacturers who fall in the category of SMEs and MSMEs. The idea is to keep the small business alive. Small businesses are feeders or suppliers to large manufacturing units hence not only does the supply side gets protected but also the people working in small setups do not lose jobs
· 10,000 Cr to NHB to refinance HFCs so as to give a much-needed stimulus to the real estate sector.
· IT Sector generates major revenue from Services; hence the layoff will be limited. A new business may slow down for a quarter or two but the ongoing business cannot stop. CEO TCS Mr. RAJESH GOPINATHAN stated NO LAYOFFs. Endorsement from the largest recruiter in the IT space
· E-commerce business is expanding at the movement with this condition of Lockdown and there is recruitment happening at Amazon and Flipkart the world. No job losses.
· Over and above this the RBI has given a moratorium to the industry to repay debt and also has taken steps relating to asset classification – NO NPAs for now. Together with this the availability of liquidity with banks will strengthen manufacturing like automobiles, real estate, etc. The employee may have to participate in the management of working capital and may need to adjust his expenses but no entrepreneur would want to lose quality talent for now.
· IMF has projected a GDP of 1.9 % in the current fiscal which will aggressively grow to 7.4 % in the next financial year.
The projections clearly demonstrate the demand to return post-COVID and to reach the level of 7.4 % of all sectors of the economy viz agriculture, manufacturing, services, hospitality, tours & tourism have to contribute. For such high growth, human resource is much required and there may be a small blip but sooner than later normalcy will come back
The only area where I see a slowdown is in discretionary spending be it hospitality, entertainment, tour and leisure travel or spending on fashion. This was anyways the luxury used by a small percentage of the population.
So, cheer up friends all is not lost and JOB losses may not be of the magnitude we anticipate in our country.
As they say “The fear of the event happening (JOB LOSS) is many folds the magnitude of the event itself”
