RBI Governor Shaktikanta Das called for a targeted infrastructure push to help give impetus to the economy. Addressing the CII National Council on Monday, Mr. Das said that notwithstanding the progress made in the infrastructure sector, large gaps still remained.
“There is clearly a need for diversifying financing options,” he said, adding that a big push to certain targeted mega infrastructure projects could reignite the economy. He also mooted the idea of a north-south and east-west expressway together with high-speed rail corridors, both of which would generate large forward and backward linkages for several other sectors of the economy.
Infrastructure was one of the five sectors that Mr. Das identified as capable of bolstering the economy, the others being farm, renewables, information & communication technology (ICT)-start-ups and value supply chains. He pointed out that harnessing the potential in these could propel India to a leadership position in the league of nations.
‘Don’t grant extension’
Later, HDFC chairman Deepak Parekh has urged Mr. Das not to grant any more extension of the moratorium and for a one-time restructuring of loans of companies to help them tide over Covid-19 related stress.
“Please do not extend the moratorium. We see people, who have the ability to pay, taking advantage under this moratorium and deferring payment. There is talk of another extension — that would hurt us, particularly smaller non banking finance companies (NBFCs),” Mr. Parekh said, posing a question to Mr. Das.
Drawing the attention of the Governor to corporate bonds, Mr. Parekh said, “Globally, central banks are buying bonds of private sector, junk bonds, commercial papers while you have taken a stand that we should fund banks and banks will buy the instruments of all these companies, micro finance institutions or housing companies. Globally a large number of central banks are directly buying the market bonds,” he said, adding RBI should do the same.
Urges loan restructuring
Mr. Parekh also said that the RBI should consider a one-time restructuring of loans. “Looking at the future, say, same time next year, if restructuring is not given, the amount of NPAs of banks, NBFCs and microfinance institutions will increase. [Allow] restructuring, we have done that in 2008 and it is worth considering, to deal with future problems.”
The RBI governor declined to answer these questions saying these were suggestions which he had taken note of.
“I have noted the suggestions. But with regard to RBI buying corporate bonds, the law does not permit it,” Mr. Das said.
