On Monday, Reserve Bank of India (RBI) Governor Shaktikanta Das underlined five positive shifts that are underway. While addressing members of the Confederation of Indian Industries (CII), he said that these positive shifts are set to shape the future of the Indian economy. He indicated that the farm sector, global value chains, information and communication technology (ICT), renewable energy, and infrastructure are the major sectors which need to be “converted into structural transformations” and will lead to “sizeable benefits for the economy”.
A few days back, a report released by the central bank stated that non-performing assets or bad loans in the country’s banking sector could rise to as much as 15 per cent of total loans by March 2021.
The RBI governor laid focus on “the fortunes shifting in favour of the farm sector, the changing energy mix in favour of renewables, leveraging information and communication technology (ICT), and start-ups to power growth, shifts in supply and value chains, both domestic and global, and infrastructure as a force-multiplier for growth.” He stated that for developing infrastructure that requires huge investments, private and public sectors both have to play a pivotal role .
He said that in the case of renewal energy, India has done a good job in ramping up installed capacity over the last five years. He stated that the share of renewable energy in installed capacity has risen to 23.4 per cent at the end of March 2020 from 11.8 per cent in March 2015.
COVID-19 pandemic and startups
Taking the ongoing COVID-19 pandemic into account, he said that the invisible enemy (Coronavirus) should be fought relentlessly. The Governor threw light upon the low funding of start-ups due to the current situation. He added that India added 7 unicorns last year. Das pointed out that ICT and start-ups are some of the key growth drivers. “The ICT revolution has placed India on the global map as a competent, reliable, and low-cost supplier of knowledge-based solutions.”
He further said, “Currently, COVID-19 is a compelling theme in all conversations… Questions about flattening of the COVID-19 curve, the arrival of the elusive vaccine, the protection of lives and livelihoods, and the shape of economic recovery haunt us day in and day out… There are no credible answers we have to these questions,”
According to a report by Business Today, Deepak Parekh, chairman of mortgage lender HDFC Ltd, on Sunday pleaded with RBI Governor Shaktikanta Das that the regulator should not extend the six-month moratorium on term loans beyond August this year. “Please don’t extend the moratorium,” pleaded 75-year-old Deepak Parekh to Governor Das, who addressed and interacted with members of Confederation of Indian Industries (CII) today.
In his virtual address, the RBI Governor refused to comment on the loan moratorium brought in by the RBI due to the COVID-19. Responding to a suggestion by HDFC chairman Deepak Parekh against extending the loan moratorium, Mr Das said: “I have noted the suggestion. I will not be able to comment on them now.”
Commenting upon the Indian agriculture he emphasised on the fact that our main challenge is surplus management rather than self-sufficiency. Das lauded the government for introducing some agrarian reforms that will boost farmers’ income and will also add value to the economy.