This post has been self-published on Youth Ki Awaaz by S Bhanu Prasad. Just like them, anyone can publish on Youth Ki Awaaz.

Reserve Bank Of India Cuts Key Interest Rates, Estimates Negative GDP Growth In 2020-21

More from S Bhanu Prasad

This post is a part of YKA’s dedicated coverage of the novel coronavirus outbreak and aims to present factual, reliable information. Read more.

On May 22, 2020, the Reserve Bank of India (RBI) at the Mumbai headquarters, announced some key interest rates cut to revive the shirking GDP growth, caused due to the COVID-19 and also because of the earlier Government of India’s (GoI) domestic policy decisions. In announcing the cuts in the key interest rates of the central bank, it showed an accommodative stance.

The RBI’s Monetary Policy Committee (MPC) in its meeting, held during May 20-22, 2020, has decided to reduce the key interest rates to revive the shrinking growth of GDP and to mitigate the impact of COVID-19 on the economy while ensuring that inflation remains within the target of 4% +/- 2%.

On the basis of both the global and the Indian economy, the MPC members, consisting of 6 officials: Dr Pami Dua, Dr Ravindra H. Dholakia, Dr Janak Raj, Dr Michael Debabrata Patra, Shri Shaktikanta Das and Dr Chetan Ghate, have taken a routine practice of voting, in order to come to a conclusion of making a majority policy decision.

Through voting, the five members have decided to reduce the Policy Repo Rate by 40 bps and one official Dr Chetan Ghate, however, voted for a reduction of 25 Basis Points (BPS). And finally, a reduction of 40 bps has been agreed in order to revive the present economy from the clutches of COVID-19. On the basis of that vote, the Central Bank has announced some major policy decisions as stated below:

  1. Reduce the Policy Repo Rate (is the rate at which the RBI lends funds to commercial banks by purchasing securities) under the Liquidity Adjustment Facility (LAF) by 40 Basis Points (BPS), i.e.., from 4.40% to 4.0% with immediate effect
  2. Reduce the Marginal Standing Facility (MSF) Rate (a window for banks to borrow from the RBI in an emergency situation when inter-bank liquidity dries up completely) and the Bank Rate (is the lending rate at which commercial banks can borrow from the RBI without providing any security) from 4.65% to 4.25% and
  3. Reduce the Reserve Repo Rate (Reverse repo rate is the rate at which the RBI borrows money from commercial banks within the country. It is a monetary policy instrument which can be used to control the money supply in the country) under the LAF from 3.75% to 3.35%.

MPC’s Two Key Policy Decision Charts

Chart: Repo Rate During 2010-2020

Chart:  Reserve Repo Rate During 2010-2020

The Assessments Of Global And Indian Economy

The MPC’s overall assessment statement comes from the standstill position of global economic activities due to the COVID-19 and from the worsening economic activities due to the lockdowns and social distancing policies in place. In further detail, it explained the global and domestic economic scenarios as follows:

Global Economy:

  • The growth during Q1: 2020 in the key Advanced Economies (AE) like the USA, Euro Area, Japan and the UK has contracted
  • The Emerging Market Economies (EME) like the Chinese economy went into pronounced decline
  • The economic activities of other EMEs like Brazil and South Africa may also shrink due to the data on the high-frequency indicators and
  • Pickup of food inflation due to supply disruptions etc..,

Indian Economy

  • Domestic economic activities have been severely impacted due to extended lockdown over a period of two months caused by the COVID-19
  • Since March, there has been a collapse of demand across urban and rural segments
  • Electricity consumption has plunged
  • Both investment activity and private consumption suffered due to collapse in the capital goods production and the large retrenchment in the output of consumer durables and non-durables
  • High-frequency indicators of service sector activities like passenger and commercial vehicle sales, domestic air passenger traffic and foreign tourist arrivals experienced sizable contractions
  • In the external sector, India’s merchandise trade slumped in April 2020, with exports shrinking by 60.3% and imports by 58.6% (y-o-y), respectively.
  • Imports contracted in all 30 commodity groups in April and while in exports contracted to 28 out of 30 commodity groups.
  • On the financing side, net foreign direct investment inflows picked up in March 2020 to US$ 2.9 billion from US$ 0.8 billion a year ago. In 2020-21 so far (till May 18), net foreign portfolio investment (FPI) in equities increased to US$ 1.2 billion from US$ 0.8 billion a year ago. In the debt segment, however, there were portfolio outflows of US$ 3.8 billion during the same period as compared with outflows of US$ 1.4 billion a year ago.

Official Address Of The 25th RBI Governor, Mr Shaktikanta Das, To The Public

RBI’s Outlook

In its outlook, the MPC observed that the macroeconomic impact of the pandemic is turning out to be more severe than initially anticipated. And stressed that the various sectors of the economy are experiencing acute stress with the impact of the shock that has been compounded by the interaction of supply disruptions and demand compression. The observations made in the statement are as follows:

        • The inflation outlook can be highly uncertain due to volatility in financial markets
        • Among the pressure points, the elevated level of pulses inflation is worrisome and warrants timely and swift supply management interventions, including – (i). A reappraisal of import duties and (ii). Step-up of open market sales/PDS-offtake by the FCI to offload some part of excess stocks can cool down cereal prices and also create room for rabi procurement
        • Due to extended lockdown, the Q1: 2020-2021 economic activity remains depressed
        • Even in Q2, the economic activity may witness subdued due to social distancing measures in place and shortage of labour due to the migrant crisis
        • Recovery of economic activities may slightly be a witness in Q3 and gain momentum only in Q4 as supply lines are restored gradually and thereafter demand rives
        • Stresses that, beyond the destruction of economic and financial activity, livelihood and health are severely affected.

Indian Economy In A ‘Negative Territory’

In analyzing the growth outlook of the economy, the MPC has judged that the risks to be gravest with most uncertainties. It says that even if all the favourable conditions, like the combination of fiscal, monetary and administrative measures are taken into consideration by the RBI, it is evident that the GDP growth in 2020-2021 is estimated to remain in ‘negative territory’.

It expected some clarity on the future course from the end May 2020 release of NSO’s statistical information on the national income.

Way Forward: Through Developmental And Regulatory Policies

MPC’s statement set out various developmental and regulatory policy measures in order to improve national growth and its intended effects. Proposed 4 policy measures as follows,

      1. Measures to Improve the Functioning of Markets: Refinancing Facility for Small Industries Development Bank of India (SIDBI) announced a special refinance facility of ₹15,000 crores to SIDBI for on-lending/refinancing. Investments by Foreign Portfolio Investors (FPI) under the Voluntary Retention Route (VRR) – Provided an additional three months time to fulfil the requirement of investment limit
      2. Measures to Support Exports and Imports: (i). Export Credit – Increased the maximum permissible period of pre-shipment and post-shipment export credit sanctioned by banks from the existing 1 year to 15 months, on/before July 31, 2020. (ii). Liquidity Facility for Exim Bank of India – Extended a line of credit of ₹15,000 crores to the EXIM Bank. (iii). Extension of Time for Payment for Imports – Extended the timer period from 6 months to 12 months on/before July 31, 2020
      3. Measures to Ease Financial Stress: (i). Moratorium on Term Loan Installments – Extended the moratorium on term loan instalments by another 3 months, i.e., from June 1, 2020, to August 31, 2020. (ii). Deferment of Interest on Working Capital Facilities – Permitted deferment of interest for another three months, from June 1, 2020, to August 31, 2020. (iii). Payment of Interest on Working Capital Facilities for the Deferment Period – Permitted to convert the accumulated interest into a funded interest term loan which shall be repayable not later than the end of the current financial year (i.e., March 31, 2021). (iv). Asset Classification. (v). Easing of Working Capital Financing. (vi). Extension of Resolution Timeline and (vii). Limit on Group Exposures under the Large Exposures Framework
      4. Debt Management: Consolidated Sinking Fund (CSF) of State Governments – Relaxation of Guidelines


In concluding the statement, the RBI says that “in response to COVID-19, the requirement of fiscal resources has increased with likely implications for market conditions going forward. The RBI shall remain watchful and support the smooth completion of the borrowing programme of the Centre and States in the least disruptive manner.”

Further informed that the minutes of the MPC’s meeting will be published by June 5, 2020.

Note: This article is based on the information retrieved from the official website of RBI. You may access it over here.

You must be to comment.

More from S Bhanu Prasad

Similar Posts

By Bedanta Upadhyay

By Rahul Shakdwepiya

By akhila cg

Wondering what to write about?

Here are some topics to get you started

Share your details to download the report.

We promise not to spam or send irrelevant information.

Share your details to download the report.

We promise not to spam or send irrelevant information.

An ambassador and trained facilitator under Eco Femme (a social enterprise working towards menstrual health in south India), Sanjina is also an active member of the MHM Collective- India and Menstrual Health Alliance- India. She has conducted Menstrual Health sessions in multiple government schools adopted by Rotary District 3240 as part of their WinS project in rural Bengal. She has also delivered training of trainers on SRHR, gender, sexuality and Menstruation for Tomorrow’s Foundation, Vikramshila Education Resource Society, Nirdhan trust and Micro Finance, Tollygunj Women In Need, Paint It Red in Kolkata.

Now as an MH Fellow with YKA, she’s expanding her impressive scope of work further by launching a campaign to facilitate the process of ensuring better menstrual health and SRH services for women residing in correctional homes in West Bengal. The campaign will entail an independent study to take stalk of the present conditions of MHM in correctional homes across the state and use its findings to build public support and political will to take the necessary action.

Saurabh has been associated with YKA as a user and has consistently been writing on the issue MHM and its intersectionality with other issues in the society. Now as an MHM Fellow with YKA, he’s launched the Right to Period campaign, which aims to ensure proper execution of MHM guidelines in Delhi’s schools.

The long-term aim of the campaign is to develop an open culture where menstruation is not treated as a taboo. The campaign also seeks to hold the schools accountable for their responsibilities as an important component in the implementation of MHM policies by making adequate sanitation infrastructure and knowledge of MHM available in school premises.

Read more about his campaign.

Harshita is a psychologist and works to support people with mental health issues, particularly adolescents who are survivors of violence. Associated with the Azadi Foundation in UP, Harshita became an MHM Fellow with YKA, with the aim of promoting better menstrual health.

Her campaign #MeriMarzi aims to promote menstrual health and wellness, hygiene and facilities for female sex workers in UP. She says, “Knowledge about natural body processes is a very basic human right. And for individuals whose occupation is providing sexual services, it becomes even more important.”

Meri Marzi aims to ensure sensitised, non-discriminatory health workers for the needs of female sex workers in the Suraksha Clinics under the UPSACS (Uttar Pradesh State AIDS Control Society) program by creating more dialogues and garnering public support for the cause of sex workers’ menstrual rights. The campaign will also ensure interventions with sex workers to clear misconceptions around overall hygiene management to ensure that results flow both ways.

Read more about her campaign.

MH Fellow Sabna comes with significant experience working with a range of development issues. A co-founder of Project Sakhi Saheli, which aims to combat period poverty and break menstrual taboos, Sabna has, in the past, worked on the issue of menstruation in urban slums of Delhi with women and adolescent girls. She and her team also released MenstraBook, with menstrastories and organised Menstra Tlk in the Delhi School of Social Work to create more conversations on menstruation.

With YKA MHM Fellow Vineet, Sabna launched Menstratalk, a campaign that aims to put an end to period poverty and smash menstrual taboos in society. As a start, the campaign aims to begin conversations on menstrual health with five hundred adolescents and youth in Delhi through offline platforms, and through this community mobilise support to create Period Friendly Institutions out of educational institutes in the city.

Read more about her campaign. 

A student from Delhi School of Social work, Vineet is a part of Project Sakhi Saheli, an initiative by the students of Delhi school of Social Work to create awareness on Menstrual Health and combat Period Poverty. Along with MHM Action Fellow Sabna, Vineet launched Menstratalk, a campaign that aims to put an end to period poverty and smash menstrual taboos in society.

As a start, the campaign aims to begin conversations on menstrual health with five hundred adolescents and youth in Delhi through offline platforms, and through this community mobilise support to create Period Friendly Institutions out of educational institutes in the city.

Find out more about the campaign here.

A native of Bhagalpur district – Bihar, Shalini Jha believes in equal rights for all genders and wants to work for a gender-equal and just society. In the past she’s had a year-long association as a community leader with Haiyya: Organise for Action’s Health Over Stigma campaign. She’s pursuing a Master’s in Literature with Ambedkar University, Delhi and as an MHM Fellow with YKA, recently launched ‘Project अल्हड़ (Alharh)’.

She says, “Bihar is ranked the lowest in India’s SDG Index 2019 for India. Hygienic and comfortable menstruation is a basic human right and sustainable development cannot be ensured if menstruators are deprived of their basic rights.” Project अल्हड़ (Alharh) aims to create a robust sensitised community in Bhagalpur to collectively spread awareness, break the taboo, debunk myths and initiate fearless conversations around menstruation. The campaign aims to reach at least 6000 adolescent girls from government and private schools in Baghalpur district in 2020.

Read more about the campaign here.

A psychologist and co-founder of a mental health NGO called Customize Cognition, Ritika forayed into the space of menstrual health and hygiene, sexual and reproductive healthcare and rights and gender equality as an MHM Fellow with YKA. She says, “The experience of working on MHM/SRHR and gender equality has been an enriching and eye-opening experience. I have learned what’s beneath the surface of the issue, be it awareness, lack of resources or disregard for trans men, who also menstruate.”

The Transmen-ses campaign aims to tackle the issue of silence and disregard for trans men’s menstruation needs, by mobilising gender sensitive health professionals and gender neutral restrooms in Lucknow.

Read more about the campaign here.

A Computer Science engineer by education, Nitisha started her career in the corporate sector, before realising she wanted to work in the development and social justice space. Since then, she has worked with Teach For India and Care India and is from the founding batch of Indian School of Development Management (ISDM), a one of its kind organisation creating leaders for the development sector through its experiential learning post graduate program.

As a Youth Ki Awaaz Menstrual Health Fellow, Nitisha has started Let’s Talk Period, a campaign to mobilise young people to switch to sustainable period products. She says, “80 lakh women in Delhi use non-biodegradable sanitary products, generate 3000 tonnes of menstrual waste, that takes 500-800 years to decompose; which in turn contributes to the health issues of all menstruators, increased burden of waste management on the city and harmful living environment for all citizens.

Let’s Talk Period aims to change this by

Find out more about her campaign here.

Share your details to download the report.

We promise not to spam or send irrelevant information.

A former Assistant Secretary with the Ministry of Women and Child Development in West Bengal for three months, Lakshmi Bhavya has been championing the cause of menstrual hygiene in her district. By associating herself with the Lalana Campaign, a holistic menstrual hygiene awareness campaign which is conducted by the Anahat NGO, Lakshmi has been slowly breaking taboos when it comes to periods and menstrual hygiene.

A Gender Rights Activist working with the tribal and marginalized communities in india, Srilekha is a PhD scholar working on understanding body and sexuality among tribal girls, to fill the gaps in research around indigenous women and their stories. Srilekha has worked extensively at the grassroots level with community based organisations, through several advocacy initiatives around Gender, Mental Health, Menstrual Hygiene and Sexual and Reproductive Health Rights (SRHR) for the indigenous in Jharkhand, over the last 6 years.

Srilekha has also contributed to sustainable livelihood projects and legal aid programs for survivors of sex trafficking. She has been conducting research based programs on maternal health, mental health, gender based violence, sex and sexuality. Her interest lies in conducting workshops for young people on life skills, feminism, gender and sexuality, trauma, resilience and interpersonal relationships.

A Guwahati-based college student pursuing her Masters in Tata Institute of Social Sciences, Bidisha started the #BleedwithDignity campaign on the technology platform, demanding that the Government of Assam install
biodegradable sanitary pad vending machines in all government schools across the state. Her petition on has already gathered support from over 90000 people and continues to grow.

Bidisha was selected in’s flagship program ‘She Creates Change’ having run successful online advocacy
campaigns, which were widely recognised. Through the #BleedwithDignity campaign; she organised and celebrated World Menstrual Hygiene Day, 2019 in Guwahati, Assam by hosting a wall mural by collaborating with local organisations. The initiative was widely covered by national and local media, and the mural was later inaugurated by the event’s chief guest Commissioner of Guwahati Municipal Corporation (GMC) Debeswar Malakar, IAS.

Sign up for the Youth Ki Awaaz Prime Ministerial Brief below