The Reserve Bank of India (RBI) governor Shaktikanta Das stated on Wednesday that while India’s financial system is growing and economic development is improving, the coronavirus has had an unequal impact on Indians, which must be addressed for long-term, inclusive progress.
The RBI governor also praised the government’s Manufacturing Production Linked Incentive (PLI) scheme. “Home to almost all of the world’s leading mobile phone manufacturers, the country has shifted from being a mobile phone importer to an exporter,” said the RBI governor.
He went on to say that international players will help India increase its share of the global value chain (GVC) and construct a more resilient supply chain network. The RBI governor stated that the increased GVC participation would improve the competitiveness of India’s big and micro, small, and medium enterprise (MSME) supplier base.
He was giving the keynote presentation at the All India Management Association’s National Management Convention.
Banks have traditionally been the economy’s principal source of credit, but non-bank funding sources have emerged. NBFCs and mutual funds are increasing their assets, while corporate bonds are becoming more popular as a source of funding, he added.
Important points to note from the RBI Governor’s keynote presentation:
Unlike financial and banking crises, history demonstrates that the impact of pandemics can be far more asymmetric, impacting the weakest parts disproportionately. He added, the coronavirus pandemic is no exception.
The pandemic, which caused enormous devastation of life and livelihood and is still haunting the world economy in numerous ways, was dubbed a watershed event of the modern period by Das. In history, there have been few shocks like coronavirus that have left policymakers with no framework to manoeuvre through the crisis.
The pandemic has had the greatest impact on the contact-intensive service industries, which employ a high number of low-skilled, low-wage workers. Lack of access to health care has disproportionately impacted the poor’s family budget in various emerging and developing nations.
Even during the pandemic, online education was unavailable to low-income households due to a lack of necessary skills and resources. Overall, there is evidence that the pandemic has adversely harmed inclusivity across countries.
Greater automation will increase overall productivity, but it might also cause labour market slack, he said. As a result, the workforce will require extensive skilling and training.
What is the PLI scheme?
For the production of large-scale electronics, the government established a Production Linked Incentive (PLI) scheme. The PLI scheme has a straightforward structure: increasing production is rewarded.
How does the PLI scheme work for businesses?
The PLI scheme for IT equipment, which was declared on March 3, 2021, offers qualified businesses a 1 to 4% reward on net incremental goods sold in particular areas manufactured in India over the foundation year of FY 2019-20 for a four-year term (FY22 to FY25).
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