The RBI’s move to extend `50,000 crore credit facility to healthcare infrastructure and vaccine manufacturers in the wake of the second Covid-19 wave will ensure availability of liquidity and address immediate funding need to scale up operations, experts said on Wednesday.
However, ICRIER-RBI Chair Professor Alok Sheel also highlighted the extensive income support through large fiscal packages given by advanced economies to deal with the adverse impact of lockdowns, which helped these countries to get back on their feet.
To cushion the pandemic’s blow to the economy, RBI Governor Shaktikanta Das on Wednesday announced certain support measures, including giving individuals and small borrowers more time to repay debt and allowed banks to give priority loans to vaccine makers, hospitals and COVID-related health infrastructure.
KPMG in India Partner and Head - Financial Risk Management Rajosik Banerjee said, “This will ensure availability of liquidity and address immediate funding need to scale up operations to deal with the second wave of COVID-19 surge on an instantaneous basis”.
ICRIER’s Sheel further said the governor, in his statement, indicated that the Reserve Bank of India is working in close cooperation with the government. The question that naturally arises is whether there would be a similar statement from the government outlining fiscal support during these trying times.
“Indeed, one would have expected that in these circumstances the first line of support would be fiscal.
“It may be recalled that during the first wave too the fiscal support was very limited, with the bulk of the support being made in the form of liquidity support and credit despite the fact that that a large number of poor people had lost their sources of livelihood on account of the stringent lockdown,” Sheel added.