Former National Development Bank chief KV Kamath on Tuesday said that given the enormity of the situation, the government had to do whatever it took to get the economy back on track and that fiscal deficit considerations could be overlooked for the time being.
In an exclusive interview to Network18, Kamath said the steps taken by the government have worked well for reviving demand in the economy.
The veteran banker also expressed confidence that the contraction in India's economy will not be as much as various economists are expecting it to be.
The International Monetary Fund expects India's GDP to contract 4.5 percent this fiscal. Most rating agencies too foresee a sharp contraction.
Kamath said the rebound so far has been faster than what most people thought it would be, and that the economy was likely to see a shallow U-shaped recovery. He said he would not want to put a number to it, but said that the landing would not be as hard as it is being widely feared. Kamath said the 'U' would have a shallow base and that the other end of the 'U' would not exactly be a right angle. He expected some pain as the economy emerged from the crisis.
Auto companies, paint companies, and many other industries have said that while production was still some way off from pre-COVID levels, the year-on-year comparison does not reflect a wide gap.
He highlighted the fact that agriculture has recovered quickly and that rural India appears to be less affected by the challenges thrown by the COVID-19 pandemic. Kamath said he was most optimistic about farm employment, as sowing in this season was nearly twice that during last year.
According to CMIE data, around 7 crore jobs were added in June, of which 1.2 crore jobs were added in the farm sector.
Kamath said that top Indian corporates were never as deleveraged as they were at present, and that as a society we would have to learn to live with COVID-19 as it was going to be with us for some time.
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