One of India's top bankers Uday Kotak has said that the country needs to print cash in order to support the economy that has taken a substantial beating due to the second wave of coronavirus. The chief executive of Kotak Mahindra Bank said that this monetary expansion needs to be done in two parts -- for those at the bottom of the resources and the other for protection of jobs for sectors affected by the pandemic.
"In my view, this is the time to expand the balance sheet of the government, duly supported by the RBI... for monetary expansion or printing of money. Time has come for us to be doing some of that... If not now, when?" Kotak said in an interview to NDTV.
He also recommended a government expenditure of up to 1 per cent of the GDP for direct transfers to the poor. This would amount to between Rs 1 lakh crore and Rs 2 lakh crore. Consumption at the bottom of the pyramid would also be strengthened this way, said the banker.
Kotak added that medical benefits need to be given to the poor.
The impact of the pandemic can be seen clearly in two categories -- ones that are going through a transitory period because of COVID-19 and are likely to survive the impact, and the ones that are structurally challenged because of how COVID-19 has changed the business model. He said that whatever can be done must be done for the first kind but things look more difficult for the second type. "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," he said.
Uday Kotak said that the government launched a very successful lending scheme last year which, he recommended, should be expanded from the current Rs 3 lakh crore to Rs 5 lakh crore. He also recommended including more sectors.