The Reserve Bank of India has allowed more space to the governments of India states and Union Territories to avail overdraft facilities. From the current 14 working days in which state governments can be in overdraft continuously, RBI has decided to increase the number of days to 21 working days to help them tide over their cash flow mismatches, it said in a notification on Tuesday. Further, "the number of days for which a State/ UT can be in overdraft in a quarter has been increased to 50 working days from the current stipulation of 36 working days," it added. However, all other stipulations remain unaltered. The arrangement has been made effective and will remain valid till 30 September 2020.
Meanwhile, former RBI governor Raghuram Rajan has suggested that the government call people who have shown capabilities in the past to tide over the current coronavirus crisis. He said that notable people from opposition parties must also be invited to mitigate the current crisis. "There is much to do. The government should call on people with proven expertise and capabilities, of whom there are so many in India, to help it manage its response. It may even want to reach across the political aisle to draw in members of the opposition who have had experience in previous times of great stress like the global financial crisis," he wrote in a blog. He also equated the ongoing crisis to the greatest emergency since Independence. Raghuram Rajan had completed his three-year term at the Reserve Bank of India in 2016. He is currently a professor of finance at the University of Chicago Booth School of Business.
Due to the current economic situation, Finance Minister Nirmala Sitharaman recently announced an economic relief package for the most vulnerable sections of the society. The country has been put under a 21-day lockdown period as the nation races to contain the spread of the virus.