MUMBAI: A combination of monetary as well as fiscal policy measures are called for to salvage the economy from the collateral damage from the fallout of the spread of coronavirus disease-COVID-19, according to a research report by the State Bank of India.
On the monetary side, besides maintaining a proactive liquidity regime as well as facilitating stability in financial markets through unconventional measures, the research report makes a case for a rate cut by the central bank to accommodate the possible surge in liquidity demand and shock-related price increases.
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The RBI may also need to consider a degree of prudential forbearance in specific sectors like hotel, aviation, transport, metal, auto components and textiles, it said. The central bank should make use of the current situation to incentivise digital payments given the risk of using currency notes in times of pandemic.
Source: Economic Times
