New Delhi: Reserve Bank of India (RBI) Governor Shaktikanta Das said Monday that on the back of counter-cyclical measures undertaken by the government, structural reforms need to be continued to revive demand and support the economy. And like Finance Minister Nirmala Sitharaman said a few days back, Das also informed that green shoots in the economy are now visible and need to be sustained to pull India out of its current slowdown.
In an interview with this agency, Das said the fallout of the outbreak of novel coronavirus in China needs to be closely monitored by ‘every policymaker’ to tailor a swift response.
While Sitharaman’s Budget for 2020-21 and recent steps have created a facilitating eco-system for reviving demand and consumption through a push on infrastructure projects, it is necessary to undertake land and labour reforms, bring efficiencies in agri marketing and focus on skill development, the RBI governor said.
The RBI saw an imminent slowdown in growth early in 2019 and used the space that was opened up by the moderation in inflation to cut interest rates on five consecutive occasions, he mentioned.
Das cited global trade and business uncertainties together with sluggish domestic demand leading to lower capacity utilisation at factories and twin balance sheet crisis of rising non-performing assets (NPAs) or bad loans on the one hand, and heavily indebted corporates on the other, for the slowdown of the economy.
“There are certain positive evidences visible. Things are slightly picking up but we have to wait and see whether these positive trends are sustaining themselves and we have to see how durable they are,” Das said.
Das however, refused to comment when asked if the growth slowing down to 4.5 per cent in the July-September was the bottom of the pit that the economy can see.
“As I have said there are evidences of positive developments. But we have to see how durable are these positive developments before we pass a judgment that from here on it is an upward trajectory,” Das pointed out.
“By and large, if you look at our projection which we have given, things should start improving in the next financial year. We have projected six per cent of GDP growth for 2020-21 against five per cent for the current fiscal,” added the RBI governor.
With a massive Rs 1.47 lakh crore of AGR dues pushing telecom firms to the brink, Das informed that the central bank is ‘very closely monitoring’ the fallout of the crisis on lenders by way of a default, if any, by telecom players.
Das said so far no red flags have been raised but RBI continues to monitor the situation closely.
Das said he cannot comment on the Supreme Court ruling. “With regard to the impact on the banking sector, we are very closely monitoring it. It all depends on how the companies concerned are able to make the payments and when they are able to make the payments. We are monitoring it,” Das pointed out.
Of the estimated dues that include interest and penalty for late payments, Airtel and Vodafone Idea owe about 60 per cent. While Airtel paid Monday Rs 10,000 crore out of the Rs 35,586 crore dues that Department of Telecommunications (DoT) thinks the company owes to the government, Vodafone Idea’s plea for being allowed to pay Rs 2,500 crore immediately and another Rs 1,000 crore by Friday to clear a part of the DoT estimated dues of Rs 53,000 crore was rejected by the apex court Monday.
Airtel has said it will clear the remaining dues before the next date of hearing March 17 Vodafone Idea has so far not provided a clear deadline for making payments.
The telecom sector, Das was quick to assert, has been one of the pillars of the economic growth of India in the last two decades.
It created demand as well as jobs just like other pillars of massive infrastructure push given by the construction of the Golden Quadrilateral highway project and information technology or IT sector. “In the telecom sector, there was a huge expansion. India was able to capitalise on that,” Das said.
Vodafone Idea chairman Kumar Mangalam Birla had in December stated that the company may have to shut if there is no relief on the statutory dues. “If we are not getting anything, then I think it is the end of the story for Vodafone Idea,” he had said. “It does not make sense to put good money after bad… We will shut shop.”
PTI