Banker urges govt. to ensure higher borrowing doesn’t push up long-term rates
Top banker Uday Kotak has called for the rapid roll-out of COVID-19 vaccines, stressing it was critical to revive the economy. He also urged the government to work with the central bank to ensure that the planned higher public borrowing in the coming year did not push up long-term interest rates, hurting potential investments.
Recalling the global economy’s resurgence after the Spanish flu in the 1920s that came to be known as the ‘Roaring Twenties’, Mr. Kotak said that 2021 could see the start of a similar recovery if the vaccinations could be expedited.
“The faster we do it to get into the post-pandemic era, the better it is. The world, and India, have taken up the challenge of vaccination and I do hope we can vaccinate our people as soon as possible and embark upon the new journey,” Mr. Kotak said in a keynote address to the All India Management Association. “I would like to see the world and India getting into the roaring Twenties of 2021 and beyond. For us to get there, one of the most critical aspects is to get COVID behind us and under control as soon as possible,” the banker said.
“The biggest opportunity and challenge for us is to get the vaccination done as soon as possible. This is one big critical item for our future,” said Mr. Kotak, who is also the president of the Confederation of Indian Industry.
The CII has urged the Centre to allow the private sector to help, adding that industry could help vaccinate 100 million people expeditiously.
Risks to opportunity
Contending that India could become the factory and the office to the global economy in a post-COVID world, Mr. Kotak, however, flagged the risks to the investments that would need to be made to tap the opportunity if long-term interest rates rose.
“Over the next 12 to 18 months also, we need to ensure that as the size of the borrowing programme goes up, we are able to keep the long-term interest rates, on the basis of which businesses and industry take investment decisions, in a reasonable range,” he added.
“I understand it is a challenging thing because you are managing many different variables, but I think a stable tax rate and a reasonable range for long-term interest rates will really help business and industry invest,” Mr. Kotak said.
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