Gurumurthy said that the economy would reinvent itself with more weightage on the health and allied sectors while the consumption pattern would change to a neccessity-driven one from as aspiration-led one.
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WorldIndiaConfirmed343,091Deaths9,900Confirmed8,034,504Deaths436,899KOLKATA: Reserve Bank of India central board director S Gurumurthy said that growth stimulus for the economy has to come from internal demand while supply side measures such as pushing bank loans may have limitations at this juncture.
He said that he expects another fiscal package towards the end of the second quarter when the spread of Covid-19 may subside and that would help demand creation. “For that, the government needs to monetise deficits”, he said, in order to create room for fiscal package as its finances are already strained.
“Banks cannot drive growth. Banks can only prevent it from falling further. The growth stimulus has to come from internal demand and that will happen when the final fiscal package is announced,” Gurumurthy said Tuesday.
In a video call with businessmen, organised by Bharat Chamber of Commerce, Gurumurthy said that the Rs 20 lakh crore financial package announced by the government might not be final because the Covid situation is still an ongoing problem and it would be difficult to access the extent of financial impact now.
Economic forecasters have predicted Indian economy to contract by 4 to 6.8 per cent in FY21, the first time in four decades.
Gurumurthy however expressed hopes that the economy would rebound faster than any other nations, and that would be visible from the first quarter of next fiscal.
Till now, both the fiscal and monetary authorities are following accommodative policies to boost credit growth. Banks are flushed with liquidity and cost of fund has been reduced to encourage entrepreneurship.
Gurumurthy said that the economy would reinvent itself with more weightage on the health and allied sectors while the consumption pattern would change to a neccessity-driven one from as aspiration-led one.
He also said that a change in the global economy is also on order with it shifting from multilatersim to unilaterism.
Source: indiatimes.com
