Das’s comments came during his keynote address at the 7th SBI Banking and Economics Conclave on Saturday.
Covid-19 is the worst health and economic crisis in the last 100 years with unprecedented negative consequences for output, jobs and well being, Reserve Bank of India (RBI) Governor Shaktikanta Das said on Saturday.
“The pandemic has dented the existing world order, global value chains, labour and capital movements across the globe,” Das said while addressing the 7th SBI Banking and Economics Conclave via video conferencing.
Das said the pandemic, perhaps, represents so far the biggest test of robustness and resilience of “our economic and financial system”.
The RBI Governor said that from February 2019 till the onset of Covid-19 in the country, the repo rate was cut on a cumulative basis by 135 basis points. The move was taken primarily to tackle the slowdown in growth which was visible at that time, he said. Das added that such measures would have positively impacted the economic activity in the country but the coronavirus crisis followed.
“The lagged impact of these measures was about to propel a cyclical turnaround in economic activity when Covid-19 brought with it calamities, miseries, endangering of lives and livelihood of people,” he added.
Das said that the six-member monetary policy committee (MPC) has decided to cumulatively cut the repo rate by 115 basis points.
“So from February 2019 the total rate cut that RBI has undertaken is 250 basis points,” Das stated.
This comes a day after an RBI report on Friday stated that the government had 5.73 billion rupees ($76.16 million) outstanding loans with the central bank under ways and means advances in the week ended July 3.
The central government had no outstanding loans in the prior week, news agency Reuters reported.
State governments had 70.04 billion rupees loans from the RBI in the week ended July 3, compared with 34.16 billion rupees in the previous week, the release showed.