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Cut in reverse repo rate, other measures insufficient: Isaac

Isaac said that the country expected a response from the RBI chief on three important demands.

Published: 18th April 2020 06:21 AM  |   Last Updated: 18th April 2020 06:21 AM   |  A+A-

Kerala Finance Minister TM Thomas Isaac

Kerala Finance Minister TM Thomas Isaac (Photo | EPS)

By Express News Service

THIRUVANANTHAPURAM: Finance Minister Thomas Isaac has said that the Reserve Bank of India’s (RBI) reduction in reverse repo rate and other measures announced by Governor Shaktikanta Das is insufficient to address the deepening economic crisis. Addressing media persons here on Friday, Isaac said that Das was silent on the demand to facilitate direct borrowing by Central and state governments from the RBI. “Central banks across the world have announced that they would print more currency and directly lend to governments. But the RBI is silent on these demands,” he said.

Isaac said that the country expected a response from the RBI chief on three important demands. They were writing off agricultural loans, extending the moratorium for a period of one year and a liberal loan scheme which included restructuring of existing loans availed of by MSMEs. “Now, its up to the Union Finance Minister to respond to these,” he said.     

The increase in ways and means advances (WMA) by 60 per cent will not help resolve the fiscal crisis faced by the states, Isaac said in a Facebook post later the day. The total sanctioned upper ceiling on state’s borrowings, including WMA in the first quarter of the new fiscal was Rs 3,159 crore. With the latest announcement on WMA, there is an increase of Rs 729 crore, he added. The minister said Kerala’s problems can be resolved only if the present fiscal deficit limit, which is three per cent of the GDP, is raised to five per cent.

Meanwhile, Isaac welcomed Das’ announcement on the Rs 50,000-crore TLTRO 2.0, a targeted long-term repo operation, for NBFCs and microfinance institutions. He also welcomed the Rs 50,000-crore refinance to all-India financial institutions like NABARD, SIDBI and the National Housing Bank. He hoped that the SIDBI will, in future, allocate more funds to the Kerala Financial Corporation, while NABARD would lend more loans to the state government and the National Housing Bank would assist the state in its LIFE Mission initiatives. 

Salary challenge
Responding to criticism, the minister reiterated that the salary challenge is voluntary. “But some employees’ organisations are against the initiative. The Opposition is bent on disrupting it at all costs,” he said. The next Cabinet meeting is expected to take a call on this.

Country expected response on three demands: Minister 
Isaac said that the country expected a response on writing off agricultural loans, extending the moratorium for a period of one year and a liberal loan scheme which included restructuring of existing loans availed of by MSMEs. 

Salary challenge: Govt to wait for another week for employees’ response
T’Puram:
Finance Minister Thomas Isaac on Friday said the government would wait for one more week for a favourable response from the employees on the salary challenge option.  He reiterated that the salary challenge was a voluntary option. “But some employees’ organisations are against the idea,” he said. Isaac said the government will wait for one week to know whether there was any ‘repentance’ from their part. If not, the next step will be taken afterwards, he said.

The next Cabinet meeting will take a call on this. It is learnt that the government is exploring some other options if the employees do not cooperate with the salary challenge. This include pooling the next DA arrear payment worth around Rs 2,700 crore to the CMDRF. Phased distribution of salary payment will also be considered.

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