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State of the Economy 2020-21: A Macro View 37

sector (especially the MSMEs). This included one of the world’s largest foodgrains distribution
programme, direct cash transfers to 42 crore individuals, more than 20 crore Women Jan Dhan
accounts, cash support to building and construction workers, `30,000 crore additional emergency
working capital funding for farmers through NABARD, additional pension payments, provision
for free gas cylinders, additional allocation under MGNREGS, as well as government guarantees
for credit, postponement of financial deadlines etc. The pace at which India could intervene
on technology related transfers of financial assistance to the poor and vulnerable during the
pandemic derives its success from the meticulously built social institution of J-A-M (JanDhan,
Aadhar and Mobile). Through the Direct Benefit Transfer system, the country could transfer
money in crores of accounts through a click of button during the pandemic time. Further,
Garib Kalyan Rojgar Abhiyaan (GKRA) was launched on 20th June, 2020 for a period of 125
days in 116 districts of 6 States to boost employment and livelihood opportunities for migrant
workers who had returned to their villages and similarly affected citizens in rural areas due to
COVID-19 pandemic. Government of India also launched Emergency Credit Line Guarantee
Scheme (ECLGS 1.0) to provide much needed relief to stressed sectors by helping entities
sustain employment and meet liabilities. A second version of the Scheme (ECLGS 2.0) was also
launched to offer necessary credit guarantee for loans by banks and NBFCs to identified stressed
sectors.
1.47 RBI undertook several conventional and unconventional liquidity enhancing measures to
manage liquidity situation in the economy. These measures, inter alia, included injection of
durable liquidity of more than `2.7 lakh crore through Open Market Operation (OMO) purchases
between February 6-December 4, 2020, `20,000 crore through two purchase auction OMOs
in State Development Loans (SDLs), `1 lakh crore via Targeted Long Term Repo Operations
(TLTROs) of up to three years’ tenor, `1.25 lakh crore through Long Term Repo Operations
(LTROs) conducted in February-March 2020, reduction in the Cash Reserve Ratio (CRR)
requirement of banks from 4 per cent of net demand and time liabilities (NDTL) to 3 per cent
with effect from March 28, 2020 augmenting primary liquidity in the banking system by about
`1.37 lakh crore, raising banks’ limit for borrowing overnight under the Marginal Standing
Facility (MSF), `50,000 crore Special Liquidity Facility for mutual funds and refinance facility
worth `75,000 crore for all India financial institutions i.e., NABARD, NHB, SIDBI and EXIM
Bank. A key measure taken by RBI and Government of India during H1:2020-21 to ameliorate
the liquidity constraints faced by NBFCs, was to set up a Special Purpose Vehicle (SPV) to
purchase short-term papers from eligible NBFCs/HFCs, which could then utilise the proceeds
to extinguish their existing liabilities.

1.48 To ameliorate corporate stress, Government suspended the initiation of fresh insolvency
proceedings under Section 7, 9 and 10 of Insolvency & Bankruptcy Code 2016 for defaults
arising on or after 25th March 2020 till 25th March 2021. RBI, too, announced loan moratorium
from 1st March 2020 to 31st August 2020 along with an asset classification dispensation and
special resolution framework for COVID-19 related stressed assets. Under the resolution plans
that could be invoked under the above window, lenders were permitted to grant additional
moratorium of up to two years. Also, MSME accounts classified as Standard where the aggregate
exposure of banks and NBFCs was `25 crore or below as on March 1, 2020, were permitted to
be restructured without a downgrade in the asset classification, subject to certain conditions.