RBI cuts rates again

The Hindu Newsletter - RBI cuts rates again Friday 22, May 2020 [alt_text]( The Evening Wrap Welcome to the Evening Wrap newsletter, your guide to the day’s biggest stories with concise analysis from The Hindu. We hope you are staying home and staying safe. Here are the big stories that you need to follow today: RBI cuts rates again The RBI has further [reduced both the repo rate and the reverse repo rate]( in yet another bid to revive economic activity. It did so in a special meeting of the monetary policy committee (MPC). Five of the six members of the MPC voted to reduce the repo rate by 40 bps to 4%. The reverse repo rate has been cut to 3.35%. The repo rate is the interest rate at which the central bank lends to commercial banks, while the reverse repo is the rate of interest that commercial banks earn on funds they park with the RBI. There has been much debate on whether these measures by the RBI – essentially monetary policy – will have the desire impact in the absence of significant fiscal measures (putting cash in the hands of people) by the government. Also, in a scenario of weak demand, pending wages, and economic uncertainty, banks have been reluctant to lend, preferring to earn the bare minimum interest by keeping their funds parked with the RBI. This probably explains why the RBI has further cut the reverse repo rate – it’s the central bank’s way of prodding and nagging the banks to loosen their purse strings. Also, in yet another monetary measure aimed at injecting liquidity, the RBI has extended the moratorium on repayments of term loans and working capital loans by another three months. “Domestic economic activity has been impacted severely by the 2-month lockdown. The top six industrialised states that account for about 60% of industrial output are largely in red or orange zones,” RBI governor Shaktikanta Das said. “High frequency indicators point to a collapse in demand beginning in March 2020, across both urban and rural segments,” he added. Interestingly, the central bank refrained from giving a projection for GDP growth for the current financial year. It would only say that GDP growth would be in the “negative territory” – with some pick-up in growth impulses from the second half of 2020-21 onwards. “It is in the growth outlook that the MPC judged the risks to be gravest,” Das said. Karachi plane crash A Pakistan International Airlines (PIA) plane with 107 people on board [crashed into a densely populated residential area near the Jinnah International Airport]( in Karachi on Friday. Dozens are feared dead. Flight PK-303 from Lahore was about to land in Karachi when it crashed at the Jinnah Garden area near Model Colony in Malir, just a minute before landing, according to a PTI report. “The PIA Airbus A320 carrying 99 passengers and eight crew members has crashed into the Jinnah housing society located near the airport,” a spokesperson of the national airline said. “The captain informed the air traffic tower he was having problems with the landing gear before disappearing from the radar,” he added. Cyclone Amphan relief package Prime Minister Narendra Modi has [announced a rehabilitation package of ₹1,000 crore]( for cyclone-affected West Bengal. “An advance assistance of ₹1,000 crore will be arranged by the government of India, so that the State government does not face any major hardship during these difficult times,” Modi said. “In addition, ₹2 lakh each will be given from the Prime Minister’s Relief Fund to the family of the deceased, and ₹50,000 each for the seriously injured,” he added. The State government had announced a relief and rehabilitation package of ₹1,000 crore on Thursday and a compensation package of ₹2.5 lakh to the families of the deceased. The Prime Minister said that the State government will prepare a detailed survey of the extent of damage and losses, and on the basis of this report, a more extensive package will likely be announced. Covid Watch: Numbers and Developments India has recorded over 6,000 coronavirus cases in the past 24 hours – the biggest single-day spike so far. The total number of cases, as it stands at the time of publishing this newsletter, is 124461, with the death toll at 3716. There’s a sharp increase in Delhi in particular, with 660 new cases reported in the past 24 hours, taking the total number of cases in the national capital to 12,319. It’s the biggest single-day jump in the number of cases in the city so far, and conforms to a trend of rising numbers [over the last three days](. At the health ministry briefing today, V.K. Paul, Chairman of the government’s Empowered Group-1 on Covid-19 and member of the NITI Aayog, said the country’s biggest achievement has been in creating public awareness and bringing about behavioural change. “We have been able to restrict the mortality rate to 2.13 deaths per million, very low compared to other countries,” he said. Khashoggi family forgives killers The family of slain Washington Post columnist [Jamal Khashoggi](announced Friday that they have forgiven his Saudi killers, giving legal reprieve to the five government agents who had been convicted of his murder and sentenced to death. “We, the sons of the martyr Jamal Khashoggi, announce that we forgive those who killed our father as we seek reward from God Almighty,” wrote one of his sons, Salah Khashoggi, on Twitter. Salah Khashoggi, who lives in Saudi Arabia and has received financial compensation from the royal court over the killing, explained that such forgiveness was extended during the last nights of the Muslim holy month of Ramadan, in line with the Islamic tradition of offering pardons in cases allowed by Islamic law. In Brief: The Council for the Indian School Certificate Examinations (CISCE) [will conduct pending class 10 and 12 examinations](from July 1 to 14. 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