Uday Kotak, one of the country's top bankers, has urged the Centre to print money to support the economy that is reeling under the second COVID wave. "In my view, this is the time to expand the balance sheet of the government, duly supported by the RBI (Reserve Bank of India)... for monetary expansion or printing of money. Time has come for us to be doing some of that... If not now, when?" the chief executive of Kotak Mahindra Bank asked during an interview to NDTV.
He suggested the cash expansion to be done in two parts—one for those at the bottom of the resources pyramid, and the other for protection of jobs for sectors affected by the pandemic.
For direct cash transfers to the poor, Kotak recommended a government expenditure of up to 1 per cent of the gross domestic product, or between Rs 1 lakh crore and Rs 2 lakh crore. This will also in effect strengthen consumption at the bottom of the pyramid, the banker said.
Medical benefits to the poorest of the poor need to be given, he added.
He further said the pandemic has revealed two categories of businesses. The first are those going through a transitory period because of Covid and are likely to survive the pandemic, while the second are those that are structurally challenged because Covid has changed the business model to an extent that they are no longer viable.
"Do whatever you can to support the first one so that they survive this and come out. For the second one, it's a much more difficult one. If we believe they can't sustain in this new world, we have to find appropriate solutions that take care of human sufferings, but you cannot make unsustainable business drag down the economy in the long term," Kotak said.
Kotak's statements come amid a rising cry for stimulus support from various quarters. Joining the chorus was economist and Nobel Laureate Abhijit Banerjee who has also urged the government to increase pandemic spending.
After a series of stimulus announcements last year, the Narendra Modi government is yet to announce any economic package this year even as the nation is braving a second but worse wave of the COVID pandemic. Amid clamour for fiscal stimulus package, media reports said that the Centre is readying one for sectors worst affected by a deadly coronavirus wave.
The finance ministry is reportedly working on proposals to bolster the tourism, aviation and hospitality industries, along with small and medium-sized companies. The discussions are at an early stage and no timeline for an announcement has been decided.
