Reserve Bank of India (RBI) Governor Shaktikanta Das said on Saturday that the outbreak of COVID-19 pandemic is unambiguously the worst health and economic crisis in the last 100 years during peacetime with unprecedented negative consequences for output, jobs and well-being. This will affect the current global order, the global value chain and the labor-capital movement throughout the world.
Speaking at the virtual conclave 'COVID-19's impact on business and economy' organized by SBI, Das said that several steps are being taken to save the financial system from the current crisis caused by COVID-19. Many measures are being made for recovery in the economy. The COVID-19 pandemic perhaps represents so far the biggest test of strength and flexibility of our economic and financial system. The medium-term outlook of the economy remains uncertain, although country has begun to reopen after more than two months of nationwide lockdown, as demand and supply shocks due to the coronavirus epidemic still loom large. He said that growth is the biggest priority of RBI. Financial stability is equally important.
The RBI governor said the offsite surveillance mechanism is being strengthened to identify the risk caused by the epidemic. Due to the effect of coronavirus, the NPA will increase and the capital will decrease. He said that RBI is in talks with all stakeholders to resolve the Punjab and Maharashtra Co-operative (PMC) bank problem.
Capital is being raised to bring flexibility in the financial system and to ensure credit flow.
There are signs of the Indian economy returning to normalcy due to the relaxation of restrictions.
Structured mechanisms are needed to overcome the problem of stressed assets. There should also be legal support for this.
Indian companies and industries are giving better response in this crisis.
The RBI cut the repo rate by 250 basis points from February 2019 till now.
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