The fight against Covid19 should focus on reviving the economy and bringing growth back on track without causing extra pressure on the fiscal deficit, according to Duvvuri Subbarao, former RBI Governor.
Delivering his valedictory address at a special foundation course for Trainee Civil Servants at MCR HRD Institute, Hyderabad. Subbarao said it was important for the fiscal system to start reviving the virtuous cycle of consumption, production, investment, and job- growth.
The RBI has been fairly successful in maintaining financial stability, despite severe pressures on liquidity and on monetary slippage, he said.
“Banks, however, have been risk-averse and that is what needs to be altered now through a proper incentive structure and stimulus”, he added.
Post Covid19 crisis, India’s turnaround would be faster, Subbarao said adding: “while domestic financial sector will be under deeper stress by the time the Covid 19 crisis ends, there are a number of silver linings in the situation, including declining crude prices, bumper crop, relatively stable rupee, and healthy external sector.’’
While underlining the critical role of migrant labor in this campaign, he called for a fair deal to them.