The Reserve Bank of India's announcement of rate cuts to mitigate the negative impact of coronavirus on the economy will "help middle class and businesses", Prime Minister Narendra Modi said on Friday.
"Today, the RBI has taken giant steps to safeguard our economy from the impact of the coronavirus. The announcements will improve liquidity, reduce cost of funds, help middle class and businesses," the Prime Minister tweeted hours after RBI Governor Shaktikanta Das's announcement on Friday morning.
The RBI chief announced a cut of 75 basis points in the repo rate to 4.4 per cent, after an unscheduled meeting of its Monetary Policy Committee. Repo rate is the key interest rate at which the RBI lends short-term funds to commercial banks. Four out of the six members of the Monetary Policy Committee voted in favour of the move.
Today @RBI has taken giant steps to safeguard our economy from the impact of the Coronavirus. The announcements will improve liquidity, reduce cost of funds, help middle class and businesses. https://t.co/pgYOUBQtNl— Narendra Modi (@narendramodi) March 27, 2020
The announcement came as India entered the third day of a 21-day countrywide lockdown to curb the rapid spread of coronavirus, which has infected nearly 700 in the country.
On Thursday, Finance Minister Nirmala Sitharaman had announced a Rs 1.7 lakh-crore financial package to support the poor through direct cash transfers and food security measures, without giving details on how the programme will be funded.
India is staring at the worst annual rate of gross domestic product (GDP) expansion recorded since the 2008-09 global financial crisis, and many economists have anticipated a further blow to the economy because of the coronavirus outbreak.
More than a billion people in India have shut themselves in after PM Modi on Tuesday announced a 21-day nationwide lockdown to contain the spread of coronavirus. Over 700 people have tested positive for COVID-19 or coronavirus and 17 have died.