Reserve Bank of India Governor Shaktikanta Das. Photo: AFP

India’s central bank has announced aid to the healthcare sector and small businessmen as the country battles the economic fallout of the second wave of Covid-19.

The Reserve Bank of India on Wednesday announced a package of 500 billion rupees for vaccine makers, medical equipment suppliers and hospitals. At a press conference RBI Governor Shaktikanta Das said the new measures will make it easier for banks to provide cheap loans to hospitals, oxygen manufacturers and patients in need of funds.

The second wave has overwhelmed the country’s healthcare infrastructure with hospitals facing shortages of beds, oxygen and vaccines. Many critically ill patients are dying because they failed to get hospital beds and medical oxygen on time. There were also incidents of hospitals running out of oxygen supply, leading to the death of in-patients.

“The devastating speed with which the virus affects different regions of the country has to be matched by swift and wide-ranging action,” he observed and added that the immediate objective is to preserve human life and restore livelihoods.

Loan leniency

The central bank also allowed certain borrowers a longer tenure to repay loans as several states have now imposed lockdowns to contain the spread of the virus. They will be classified as priority sector loans and feature a lower interest rate.

This waiver will be available to an individual or small enterprise with an outstanding loan of up to 250 million rupees (US$ 3.39 million). However, it will be open only for those who did not avail themselves of loan restructuring last year. Restructuring under the proposed framework may be invoked up to September 30 and will have to be implemented within 90 days, the RBI governor said.

He observed that the resurgence of Covid-19 pandemic in recent weeks had created new uncertainties and impacted the nascent economic revival. “In this environment, the most vulnerable category of borrowers are individual borrowers and small businesses,” he added.

Second wave

India’s Covid-19 caseload recently crossed 20 million and is now second only to that of the US. Its share of global active coronavirus cases now stands at 18.53% and is second among the most affected countries. The death toll has crossed 222,000 or 1.1% of total confirmed infections.

However, health workers and scientists allege that Covid-19 infections and related deaths are being underreported and claim that the true extent of devastation caused by the second wave is much worse than what the official numbers suggest.