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THE GIST of Editorial for UPSC Exams : 25 May 2020 (Time after time: On RBI repo rate cut (The Hindu))

Time after time: On RBI repo rate cut(The Hindu)

Mains Paper 3:Economy
Prelims level: REPO rate
Mains level: Impact of repo rate cut to reduce financial burden

Context:

The RBI has once again stepped in at the right time with measures that will reduce the cost of capital and ease the financial burden on businesses due to the extended lockdown.
With Friday’s repo rate cut of 40 basis points, the RBI has shavedoff 1.15 percentage points from the rate chart in the 58 days since the lockdown began, bringing the repo rate down to 4% and the reverse repo rate to 3.35%.

Measures taken by the RBI:

The central bank may have played out its rate cut card for now, it reserves some leverage for the future if economic conditions deteriorateeven further.
In fact, there are those who believe that the latest cut may be no more than a sentiment booster as economic activity is at its nadirand there are not many investment proposals on the anvilthat may benefit from the lower interest rate.
Existing borrowers may be the ........................................

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Empathy:

The RBI has also shown empathy by allowing accumulated interest on working capital loans to be converted into a term loan repayable by the end of this fiscal.
Borrowers would otherwise have been faced with the dauntingprospect of paying up their interest dues in one shot at the end of the moratorium period.
The extended period given .............................

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Conclusion:

The central bank has played its cards well here because there is no way of knowing the true extent of distress. Hence it will be difficult to propose the right restructuring norms.
Chances are that this may well form part of the RBI’s next announcement.
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Prelims Questions:

Q1. With reference to the National Dengue Day, consider the following statements:
1. The dengue virus (DEN) comprises four distinct serotypes (DEN-1, DEN-2, DEN-3 and DEN-4) which belong to the genus Flavivirus.
2. Culex mosquitoes is the main vector that transmits the viruses that cause dengue.

Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2