India at cusp of turnaround in fortunes: RBI guv

3 months ago 9

NEW DELHI: Reserve Bank of India governor

Shaktikanta Das

on Thursday said that India is at the cusp of turnaround in fortunes with sectors recovering from Covid-induced slowdowns.
Addressing the 185th foundation day of Bombay Chamber of Commerce, Das noted that

manufacturing sector

has shown good recovery and is spearheading growth.
Highlighting that India now supplies more than half of the global demand for vaccines, the

RBI governor

emphasised that corporate sector needs to invest more in healthcare to create skill and scale.
Here are the key points from Shaktikanta Das's speech:
* Fuel price hike has cost-push factor as they have an impact on cost of manufacturing. Hence, there is need for coordinated action between centre, states on reduction in taxes on fuel prices.
* Both the centre and the state governments have their revenue pressures and they are required to spend high sums of money to enable the country and the people to come out of the Covid-19 pandemic stress.
* We have precise idea of build up of stressed assets in banks. The financial sector in much better place now than earlier.
* RBI is working towards improving regulatory architecture for micro finance institutions (MFIs).
* Refining regulatory architecture on asset reconstruction companies (ARCs) is on cards.
* Post Covid-19, the healthcare sector has emerged as a major fault-line as well as a sector with tremendous growth opportunities. With a network of more than 3,000 companies, India now ranks third globally for pharmaceutical production by volume. The sector generates more than $12 billion surplus annually.
* The sector is expected to witness strong growth in the coming years due to its commitment to R&D and cost of production. It is expected to meet major demand of the world for vaccines and medicine in the post-Covid world.
* MSMEs has emerged as the growth engine of economy with a vast network of about 6.33 crore enterprises contributing 30 per cent of our nominal GDP and 58 per cent to exports.
* MSME sector employs 11 crore people, second only to agriculture. The sector has remained vulnerable due to the pandemic and in this regard government introduced EGLS and credit linked incentive scheme for the sector.
* We will continue to support the recovery process by ensuring ample amount of liquidity in the system, while maintaining financial stability.
* Global GDP is estimated to have contracted by 3.5 per cent during 2020, much higher than 0.1 per cent witnessed during financial crisis of 2008.
* While, global merchandise trade is estimated to have contracted only by 9.2 per cent in 2020 as against a contraction of 22 per cent during 2009.
* This differential pattern could be attributed to major role played by the domestic drivers across countries, induced by the lockdown during the recent episode of Covid-19.
* Even though merchandise trade has shown signs of recovery during December 2020, recovery of services trade is yet to gain traction as subdued cross border tourism and travel restrictions continue to weigh in on overall sector.
* Manufacturing sector is spearheading growth recovery as many contact-intensive services segments are severely affected by the crisis.
* Initiatives of government under Atmanirbhar Bharat Abhiyan and Union Budget 2021 towards developing a vibrant manufacturing sector and infrastructure acknowledges the strong linkages they have with rest of the sectors.
* The PLI scheme aims to make India an integral part of global value chain. This along with reforms in labour market can go a long way in propelling growth to an elevated trajectory for the manufacturing sector and reap its employment potential in India.
* Digital penetration in India has scaled a new high. Time has come to increase its application while strengthening the digital infrastructure.
* As digital capabilities improve and connectivity becomes omnipresent technological innovation and technology-driven revolution are poised to quickly and radically change India's economy.
* Digital technology has the potential to raise the productivity of agriculture, manufacturing and businesses as well as improve the delivery of public services like healthcare and education. In the financial sector this could lead to higher financial inclusion, lesser information asymmetry and reduced credit risk.

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