Reserve Bank of India Governor Shaktikanta Das on Wednesday said the country is “at the doorstep of the revival process” from the coronavirus pandemic, PTI reported. He added that the government’s
fiscal and RBI’s monetary policies were counter-cyclical and accommodative.
“The government has undertaken several measures in very, very prudent and well calibrated measure in the context of the pandemic,” Das said. “First, to provide financial support to the vulnerable sections of the society and then provide certain kinds of relief to the other segments like industry and business.”
Das was speaking at an event to release Portraits of Power: Half a Century of Being at Ringside, an autobiography of NK Singh, chairman of the 15th Finance Commission.
The central bank chief also said the government would have to revisit its fiscal roadmap once the worst effects of the pandemic is tackled. “India is at the doorstep of revival process after the effects of the pandemic and it’s very important that financial entities have adequate capital,” Das said. “Many of them have already raised capital, others in public and private sector are planning and would certainly do so in the coming months.”
He stressed on the need for reforms in the banking sector, saying it has been a concern since the 2008 global financial crisis. “Banks which have robust governance practices, robust internal controls systems, robust risk assessment and which do not undertake smart accounting, if I can put that way, I think those banks are the ones which are never over-leveraged, they always survive,” he added. “Not only survive, they grow in every crisis...governance reforms is ownership agnostic.”
India faces the biggest contraction of major emerging markets in the wake of the coronavirus pandemic.
The lockdowns imposed by the Narendra Modi government on March 25 was the world’s largest, causing the economy to contract by a record 23.9% in the April to June quarter.
On October 13, the International Monetary Fund predicted that the Indian economy would contract by 10.3% in 2020-’21. The Washington-based lender, in its World Economic Outlook report, had said “revisions to the forecast are particularly large for India, where GDP contracted much more severely than expected in the second quarter”.
It has also estimated that India’s per capita Gross Domestic Product will shrink 10.3%, ending March 31, 2021, while the figure in Bangladesh is expected to grow 3.8%. With these projections, India will be the third-poorest country in South Asia. Pakistan and Nepal are will be only countries with lower GDP. Bangladesh, Bhutan, Sri Lanka and Maldives would be ahead of India. The IMF predicted that Sri Lanka will be the second-most-affected after India. Sri Lanka’s per capita GDP is expected to shrink 4.6% in the current calendar year.