India announced triumph over Covid-19 early: Uday Kotak
Uday Kotak also pitched for the RBI expanding its balance sheet in order to mitigate the economic impact of the pandemic
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Mumbai: Veteran banker Uday Kotak on Monday said everyone in India erred in declaring triumph over COVID-19 very early, and suggested curtailing all non-essential economic activities to protect lives amid the deadly second wave of the pandemic.
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He also pitched for the RBI expanding its balance sheet in order to mitigate the economic impact of the pandemic.
Asked at a virtual press conference if he was advocating a national lockdown, Kotak, who is also the president of industry lobby CII, said the views of national and international experts should be taken on board along with the ability of the medical infrastructure.
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Many experts have said India announced a victory over the pandemic early, and blamed that attitude for the inadequate response to the second wave, which is yet to reach its peak.
"All of us in India made the mistake of underestimating the challenge of COVID 2.0. We declared victory as a country, as people, and as a financial sector by January-February. (We said) 'Covid is behind us' and we were almost triumphant about victory, and then we got hit by this (second wave)," Kotak told reporters.
In what can be seen as an extension of his remarks as the CII head on Sunday, Kotak on Monday pitched for heightened efforts to save lives.
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"We have to do whatever it takes to save lives first, even as we battle for livelihoods. And if our healthcare capacity is currently going through its challenges, we must be ready to curtail non-essential economic activities," he said.
The government had in March 2020 announced a national lockdown to curb coronavirus infections. The lockdown had a chilling impact on the economy, which is estimated to have contracted by 7.6 per cent in FY21.
Kotak further said the chain of the virus can be broken in a fortnight or may be more. He added that as responsible corporate citizens, companies should be willing to bear the cost of not sending their employees out and also asked for some planning to be done in order to prepare for a third wave of infections.
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Kotak Mahindra Bank, which is promoted by Kotak, has taken a decision to let employees stay at home for the next week and will be reviewing the same next week, he said.
Even in branches, which are typically manned by eight people, the number of employees present has been reduced to three, he said, adding that the bank is willing to bear the business cost of its sales and collection teams not going out on the field for a week to meet the broader objective of saving lives.
Kotak said his company lost 17 employees in the whole 12 months of FY21, while in April alone, it lost an equal number of people, and said hence it is important to protect lives at present.
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The banker said he expects the second wave's trajectory to be similar to that in the UK, where the infections declined as fast as they spiked. India is reporting around 4 lakh new cases and over 3,000 official deaths per day already.
Kotak also said there is a need to focus on production, supply and movement of essential services like oxygen and new bed creation in hospitals even as we seek to break the chain of virus infections by curtailing the non-essential economic activities.
To take care of the economic damage, he said there is no option but for the central bank to expand its balance sheet to support the economy and cited the RBI’s decision to buy over ₹1 lakh crore of bonds in FY22 as a measure in the same direction.
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Generally, such expansion of the balance sheet has an impact in terms of inflation, which continues to be higher than the 4 per cent target given to the central bank.
In support of his suggestion, Kotak said the first principle rules of economics will have to be kept aside in order to protect the economy.
"The people balance sheets should matter more than the financial balance sheets," he asserted.
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