Statement by CEO of Kotak bank
As India’s GDP struggles to stand back, Uday Kotak, one of the country’s top banker’s has spoken on the matter in an interview. The COVID-19 crisis has shown its effect on every sector including, transportation, supply chain, banking, economy, which has resulted in some of the top companies in India facing debts.
To expand the economy, and stabilize the monetary aspect of every institution, then the expansion needs to be done at two levels- one for those who are on the bottom of the resource pyramid and economically weak, whereas the other for those who are affected as COVID-19 snatched away from their income and resulted in unemployment.
“This is the perfect time to increase government spending, which is appropriately supported by the RBI (Reserve Bank of India), as per my opinion. Expansion or printing should be done to provide everyone with cash supplies. The time has come for us to do something that … If not now, when?” Mr. Kotak said.
With a direct transfer of funds to the poor, Mr. Kotak also recommended the government to spend up to 1 percent of gross domestic product, or between ₹1 lakh crore and ₹2 lakh crore. This will also strengthen the use of the bottom of the pyramid”, the chief executive officer of Kotak Bank said. “The medical facilities should be provided to the economically weaker sections equally”, he further added.
India’s economy was recovering, becoming one of the most influential economies in the world. But as the second wave of COVID arrived, everything retrograded back to where it originally was. In January, the country started easing restrictions, but as the pernicious second wave arrived, the restrictions were imposed again, which affected the businesses severely.
Mr. Kotak mentioned the two levels of businesses there: the first one who is in the transitory phase as the pandemic continues to rise and go down, and are likely to survive the transition, whereas the others whose businesses are structurally challenged since COVID-19 has changed their business models which are no longer viable.
“Do your best to support the first one to survive this and get out. Second, it is very difficult. If we believe they will not be able to settle in the new world, we must find the right solutions,”- Mr. Kotak. Poverty is on its all-time high as nearly 230 million Indians are a victim of it.
Women and youth are affected the most and the second wave has made the situation even worse. As the lockdown was implemented in March and still continues to exist state-wise, many people have permanently lost their income source. 15% of the people will be unable to find jobs even by the end of this year, he mentioned.
The vulnerable households should be provided with free groceries and cash transfers. Employment programs should be launched in the world affected states like Haryana, Karnataka, and Maharashtra and the fiscal stimulus should be provided to all.