The unusual conditions created by Corona and the lockdown have brought the already staggering Indian economy into a bad state. A glimpse of this can also be seen in the announcements of Reserve Bank Governor Shaktikanta Das last week.
He has reduced the repo rate, which is continuously coming down, to four percent, which is its lowest level since 2000. Repo rate is the rate at which banks get loans from the Reserve Bank.
The RBI governor extended the exemption period of three months by August till the repayment of the loans taken from banks till August. Indicating the seriousness of the challenges facing the economy, he also made it clear that the GDP growth figures this year could remain negative.
This clearness is good in the sense that when the country is going through a disaster, the countrymen should not live in any mistake. But the truth is that after a limit, GDP figures are not only important for the countrymen but also for the government.
The bigger question is how many companies will be able to stand in which sectors, how many shops will be able to remain open and eventually it will be possible to retain the employment of so many people. Limited in this view, but the first two announcements can be useful.
Reduction in repo rate will ensure liquidity in the market, so at least a cash shortage will not be an issue. The question is if there is no demand in the market to bring the economy into action by cheap loans, then for whom will companies increase their production by taking loans?
A few more months' exemptions on repayment of the loan installment does not seem to give much relief because the debt has to be repaid. All the installments left here will accumulate and after the period of relief is over, this period will also be charged by adding interest.
In such a situation, there is an apprehension that banks do not have to face a huge increase in the number of defaulters as soon as the repayment starts.
However, despite all the dangers, these exemptions are not unusable or unnecessary. For many of those businessmen who will use these concessions to maintain a trusting relationship with their employees and customers, they can be a lifesaving work for many. After all, business sense is another name for realizing the needs related to changing conditions in time and changing its appearance and attitude accordingly.
The greatest tragedy, the greatest crisis, even the most dangerous epidemic, cannot defeat this aspect of human life. With the lockdown partially opening, there has been a stir in Indian markets. It is expected that in the next one or two months, their twinkling will be restored as before.