75 bps: The reduction in repo rate announced by the RBI on March 27.
- The Indian central bank might have been late in its response to the coronavirus crisis, but it made up for the delay with the extent of its announcements.
- The repo rate was cut by 75 basis points to 4.4 per cent, and the reverse repo rate by 90 basis points to 4 per cent.
- The RBI’s stance remains accommodative. The central bank said it would also conduct targeted long-term repo operations for up to three years, amounting to a total of Rs 1 trillion.
- The cash reserve ratio (CRR) was cut by 100 basis points to 3 per cent, a move that is estimated to release Rs 1.37 trillion into the system.
- These measures are expected to address the stress in the corporate and money markets.
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A few links for further reading
Invest and emigrate
The great Indian dream of settling abroad is achievable if one has a few crores to invest. Rich nations offer a variety of investment options in a quid pro quo arrangement: immigrants get a better quality of life and revenue from them helps these countries’ finances. Wealthy Indians, troubled by polluted cities and the red tape holding up entrepreneurship, may want a quick ticket out of the country. Sanjay Kumar Singh lists a range of options: from a Canadian province’s investor programme to America’s US EB-5 plan.
Small savings schemes
Investors in small savings schemes breathed a sigh of relief when the government announced on October 1 that interest rates on these instruments would not be revised for the fourth quarter of the calendar year. With the economy witnessing a slowdown, and the stock markets also turning volatile, many investors are looking for alternative avenues to park their savings. Small savings schemes, with their sovereign guarantee, have emerged as a viable alternative.
Hard path to growth
The signals for the economy are not positive: overall demand is yet to pick up; the share of total exports in India’s GDP is declining, and industrial output pattern remains worrying.