India yesterday expanded its version of quantitative easing to keep borrowing costs anchored as economic growth is expected to falter due to a surge in COVID-19 infections.
The central bank is to buy an additional 1.2 trillion rupees (US$16.4 billion) of bonds next quarter under the so-called Government Securities Acquisition Program 2.0, Reserve Bank of India (RBI) Governor Shaktikanta Das said.
The program is aimed at keeping interest rates low at a time when the Indian government plans a near-record borrowing to aid the economy’s recovery.
The bank lowered its expectation for GDP growth to 9.5 percent in the current fiscal year, down
Read more about Analysts see RBI remain accommodative, hold rates in June 4 policy review on Business Standard. In April, the six-member monetary policy committee had voted unanimously for a status quo on the key rates
India central bank steps up loan relief
ECONOMIC SUPPORT: New measures include loan restructuring for small businesses, boosting credit for healthcare services, fresh loans to vaccine makers and bond buying
Bloomberg
The Reserve Bank of India (RBI) yesterday announced new loan relief measures for small businesses and pledged to inject 500 billion rupees (US$6.8 billion) of liquidity to support the economy against a second deadly COVID-19 wave.
Some businesses would be eligible for loan restructuring to give them more time to repay debt and keep them going through the COVID-19 pandemic, RBI Governor Shaktikanta Das said in an unscheduled address.
He also announced steps to boost credit for healthcare services, provide fresh lending to vaccine makers and a bond-buying program.
Why RBI’s G-SAP is a masterstroke
The OMO clone will facilitate govt’s big borrowing plan at a lower cost, by bringing certainty to timing & amount of bond buys
In the recent bi-monthly monetary policy announcement, the RBI promoted a new programme the Government Securities Acquisition Program (G-SAP). The initiative is believed to be a counterpart of Open Market Operations (OMOs) the purchase and sale of government securities (G-Secs) by the RBI on behalf of the government to reduce the volatility in the bond market.
Keeping the policy rates unaffected, the RBI continued its commitment to ‘accommodative policy’ stance while announcing the purchase of G-Secs worth ₹1-lakh crore in the first quarter of financial year 2021-22 through the secondary market.