Amid raising concerns over the spread of coronavirus, RBI Governor Shaktikanta Das on Wednesday said the deadly virus will have a limited impact on India but the global GDP and trade will definitely get affected due to the large size of the Chinese economy.
Shaktikanta Das said that few sectors in India are likely to see some disruptions but alternatives are being explored to overcome those issues. Pharmaceutical and electronic manufacturing sectors, which are highly dependent on China for inputs, may be impacted, Das told news agency PTI in an interview.
"It is definitely an issue which needs to be closely monitored by every policymaker whether in India or any other country. Every policymaker, every monetary authority needs to keep a very close watch. So coronavirus issue needs to be closely watched," he said.
His comment came a day after Finance Minister Nirmala Sitharaman said that the government would soon announce measures to deal with the impact of coronavirus outbreak on the domestic industry. She had said that there were no concerns about price rise so far due to coronavirus outbreak.
Comparing the potential economic impact of the coronavirus outbreak to that of SARS in 2003, the RBI governor said that the Covid-19 outbreak appears to be larger and this time China's share in world GDP and world trade is much higher. "So, the coronavirus will definitely have an impact on the global GDP and global trade," he said adding that every major economy today will have to be very careful and must monitor the situation closely.
"For India, China is an important trading partner and policymakers both in the government and the monetary authority are very watchful of the developments that are taking place," he said.
He said that most of the large pharma companies always keep stock for three-four months. So, they should be able to manage and also those provinces from where these pharma intermediates are sourced have not been impacted by the virus outbreak, he added.
Indian drug manufacturers are to a large extent dependent on China for sourcing their drug ingredients or the active pharmaceutical ingredients. Industries across China have halted operations due to the deadly virus outbreak. Companies are looking at delays up to two weeks in schedules, affecting supply of raw materials to producers around the world.
By Chitranjan Kumar with PTI inputs