Finance Minister Nirmala Sitharaman has announced a ₹1.7 lakh crore relief package to help the daily wagers and poor during the 21-day lockdown due to COVID-19. Meanwhile, RBI has also followed suit and decided to slash interest rates by 75 basis points or 0.75%. Complete Coverage: Coronavirus
Crux of the Matter
Shielding the Real Economy FM announced that the relief package, ‘Gareeb Kalyan Yojna’, will include a mix of direct cash transfer benefits and food supplies. Food security under the Pradhan Mantri Gareeb Kalyan Ann Yojna (PMGKY) is likely to benefit 80 crore people. Under this scheme, every household will get an additional 5 kg of Wheat or Rice and 1 kg of Pulses for three months. She also announced an insurance cover of ₹50 lakh for every healthcare worker for the coming three months. Following benefits will be given under the Direct Benefit Transfer:
₹2,000 will be transferred to 8.69 crore farmers in the first week of April.
MNREGA workers will get a hike of ₹2,000 on their wages.
₹1,000 will be transferred in two installments to 3 crore senior citizens, widows, and people with disabilities.
20 crore women account holders in Jan Dhan will receive ₹500 per month for the coming three months.
Under the Ujjawala scheme, BPL families will get free cylinders for the coming three months.
RBI Follows Suit To cope with the slowing demand, like Central banks across the globe, the Reserve Bank of India (RBI) has also reduced the interest rate. It slashed the repo rate by 75 basis points or 0.75% (1 basis point = 0.01%) and brought it down to 4.4%. Repo rate is the rate at which RBI lends money to commercial banks and is generally linked closely to the interest rates that commercial banks charge on loans. The US had cut its interest rate twice and brought it down to near 0 to combat the dipping demand due to Coronavirus. RBI also announced that it is permitting all banks and NBFCs to allow a moratorium of three months on term loans. This means banks can allow you to put your EMI on term loans on hold for the coming three months without affecting your credit history.
Curiopedia
Repo rate is the rate at which RBI lends to its clients generally against government securities. Reduction in repo rate helps the commercial banks to get money at a cheaper rate. Increase in repo rate discourages the commercial banks to get money as it becomes expensive. Reverse repo rate is the rate at which RBI borrows money from commercial banks. Increase in the repo rate increases the cost of borrowing and lending of banks which discourages the public from borrowing money and encourages them to deposit. As the rates increase, the availability of credit and demand decreases. More Info
Curated Coverage
Comments