Reserve Bank of India (RBI) central board director S Gurumurthy said that growth stimulus for the economy has to come from internal demand while supply side measures such as pushing bank loans may have limitations at this juncture.
He expects another fiscal package towards the end of the second quarter when the spread of Coronvirus may subside and that would help demand creation. “For that, the government needs to monetise deficits”, he said, in order to create room for fiscal package as its finances are already strained.
In a video call with businessmen, organised by Bharat Chamber of Commerce, Gurumurthy said ?”Banks cannot drive growth. Banks can only prevent it from falling further. The growth stimulus has to come from internal demand and that will happen when the final fiscal package is announced. The Rs 20 lakh crore financial package announced by the government might not be final because the Covid situation is still an ongoing problem and it would be difficult to access the extent of financial impact now.,”
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