Uday Kotak suggests Centre printing more money to stablise economy

Amidst financial troubles caused by the resurgent wave of COVID-19, Uday Kotak, one of India's top bankers has called for an expansion of the balance sheet of the government, duly supported by the RBI (Reserve Bank of India) for monetary expansion or printing of money.

"The government last year announced a very successful lending scheme by banks for the stressed sectors. I'd recommend that the scheme be expanded from the current ₹ 3 lakh crore to ₹ 5 lakh crore and more sectors be included so that greater support to the economy can be given as soon as possible," Mr Kotak told NDTV.

This expansion, said the chief executive of Kotak Mahindra Bank to NDTV, needs to be done in two parts - one for those at the bottom of the resources pyramid, and the other for the protection of jobs for sectors affected by the pandemic.

For direct cash transfers to the poor, Mr Kotak recommended a government expenditure of up to 1 per cent of the gross domestic product, or between ₹ 1 lakh crore and ₹ 2 lakh crore. This will also in effect strengthen consumption at the bottom of the pyramid, the banker said, also adding that medical benefits should be provided to the poorest of the poor.

Kotak distinguished between businesses that were undergoing a transitory period due to the pandemic and those which were structurally challenged by it, to the extent that their business model was not 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," Mr Kotak said.

A study by the Bengaluru-based Azim Premji University published earlier this month revealed that over 230 million Indians fell into poverty due to the pandemic last year, with around 100 million people out of work, and another 15 per cent unable to find jobs even by the end of the year. The report's authors had also asked the centre to expand its fiscal stimulus by providing free groceries and cash transfers to the most vulnerable households as well as launch an employment programme in the worst-hit districts.stabilise