Daily Analysis of 'The Hindu' - 28th March, 2020 | Additional Study Material for UPSC PDF Download

 Page 2


RBI’S GUNS BOOM
?RBI finally rolled out its big guns to fight the effects of the coronavirus on the 
financial system.
?Businesses were clamouring for relief.
?Governor Shaktikanta Das’s measures address the crucial factor of sustaining system
liquidity while offering palliatives to individuals and businesses.
?There is no certainty over how long this uncertainty will prolong.
?Announcements by both RBI Gov and FinMin can only be the initial steps needed to 
protect the economy. 
Page 3


RBI’S GUNS BOOM
?RBI finally rolled out its big guns to fight the effects of the coronavirus on the 
financial system.
?Businesses were clamouring for relief.
?Governor Shaktikanta Das’s measures address the crucial factor of sustaining system
liquidity while offering palliatives to individuals and businesses.
?There is no certainty over how long this uncertainty will prolong.
?Announcements by both RBI Gov and FinMin can only be the initial steps needed to 
protect the economy. 
?There will be more to do as the crisis evolves; governments and regulators are 
reacting to events, as opposed to being proactive, simply because this is a kind of 
crisis that they have not dealt with before.
?Existing borrowers will benefit assuming that banks pass on the cut quickly — it is 
hoped that they really do so — but there is going to be nothing like the cut spurring 
fresh investment, which will be the last thing on the minds of businessmen.
?The sum total of new long-term repo operations of ?1-lakh crore, and ?1.37-lakh 
crore each from the cut in cash reserve ratio and increase in marginal standing 
facility (overnight borrowings by banks from the RBI) adds up to a very significant 
?3.74-lakh crore.
?Together with the ?2.8-lakh crore pumped in through various market interventions 
since February, the RBI’s liquidity injection amounts to a whopping 3.4% of GDP.
Page 4


RBI’S GUNS BOOM
?RBI finally rolled out its big guns to fight the effects of the coronavirus on the 
financial system.
?Businesses were clamouring for relief.
?Governor Shaktikanta Das’s measures address the crucial factor of sustaining system
liquidity while offering palliatives to individuals and businesses.
?There is no certainty over how long this uncertainty will prolong.
?Announcements by both RBI Gov and FinMin can only be the initial steps needed to 
protect the economy. 
?There will be more to do as the crisis evolves; governments and regulators are 
reacting to events, as opposed to being proactive, simply because this is a kind of 
crisis that they have not dealt with before.
?Existing borrowers will benefit assuming that banks pass on the cut quickly — it is 
hoped that they really do so — but there is going to be nothing like the cut spurring 
fresh investment, which will be the last thing on the minds of businessmen.
?The sum total of new long-term repo operations of ?1-lakh crore, and ?1.37-lakh 
crore each from the cut in cash reserve ratio and increase in marginal standing 
facility (overnight borrowings by banks from the RBI) adds up to a very significant 
?3.74-lakh crore.
?Together with the ?2.8-lakh crore pumped in through various market interventions 
since February, the RBI’s liquidity injection amounts to a whopping 3.4% of GDP.
?To be sure, there will be consequences of heightened liquidity but that is a problem 
for another day. 
?The priority is to keep the system lubricated. 
?The moratorium on term loans and deferment of interest on working capital loans 
will reduce anxiety among businesses and individuals who will see a fall in 
income/cash flows. 
?In sum, it is a good start by the RBI but it needs to keep thinking on its feet and react
quickly as the situation evolves.
Page 5


RBI’S GUNS BOOM
?RBI finally rolled out its big guns to fight the effects of the coronavirus on the 
financial system.
?Businesses were clamouring for relief.
?Governor Shaktikanta Das’s measures address the crucial factor of sustaining system
liquidity while offering palliatives to individuals and businesses.
?There is no certainty over how long this uncertainty will prolong.
?Announcements by both RBI Gov and FinMin can only be the initial steps needed to 
protect the economy. 
?There will be more to do as the crisis evolves; governments and regulators are 
reacting to events, as opposed to being proactive, simply because this is a kind of 
crisis that they have not dealt with before.
?Existing borrowers will benefit assuming that banks pass on the cut quickly — it is 
hoped that they really do so — but there is going to be nothing like the cut spurring 
fresh investment, which will be the last thing on the minds of businessmen.
?The sum total of new long-term repo operations of ?1-lakh crore, and ?1.37-lakh 
crore each from the cut in cash reserve ratio and increase in marginal standing 
facility (overnight borrowings by banks from the RBI) adds up to a very significant 
?3.74-lakh crore.
?Together with the ?2.8-lakh crore pumped in through various market interventions 
since February, the RBI’s liquidity injection amounts to a whopping 3.4% of GDP.
?To be sure, there will be consequences of heightened liquidity but that is a problem 
for another day. 
?The priority is to keep the system lubricated. 
?The moratorium on term loans and deferment of interest on working capital loans 
will reduce anxiety among businesses and individuals who will see a fall in 
income/cash flows. 
?In sum, it is a good start by the RBI but it needs to keep thinking on its feet and react
quickly as the situation evolves.