There are reports that the number of testing being done now is not adequate and that we should do testing in a big way. The government should spend on expenditures required to combat the virus. But the question is what kind of expenditures will have to be incurred. But in a time like this, we need to allow fiscal deficit to rise. On the fiscal side, the problem essentially is that the fiscal situation is already difficult. What should the Centre do on the fiscal side? Banks can, in turn, provide additional benefit to borrowers. All of these will considerably enhance the liquidity in the system. They are also doing long-term repos with banks. It is doing open market operations in a big way.
Secondly, a certain amount of additional liquidity can be provided, and this the RBI of course is already doing. Reserve Bank to ease rupee trade guidelines soon
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