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Shaktikanta Das: As we recover, must deal with legacies of crisis and create conditions for strong, inclusive and sustainable growth

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Das was addressing keynotes at the 48th National Management Convention of the All India Management Association (AIMA).
The Reserve Bank of India (RBI) governor Shaktikanta Das stated that as India emerge from the present crisis and look beyond, this is the right time to step back a little and plan for an economy that is stronger, more inclusive and sustainable. Das was addressing keynotes at the 48th National Management Convention of the All India Management Association (AIMA).
Towards a more inclusive sustainable economy, Das said that "history shows that the impact of pandemics, unlike financial and banking crises, could be a lot more asymmetric by affecting the vulnerable segments more. The COVID-19 pandemic is no exception. Within countries, contact-intensive service sectors employing a large number of informal, low-skilled and low-wage workers have been hit harder. In several emerging and developing economies, lack of health care access has disproportionately affected the family budget of the poor. Even education which was provided online during the pandemic excluded the low income households due to the lack of requisite skills and resources. Overall, there are evidences across countries that the pandemic may have severely dented inclusivity."
On the global recovery, Das pointed out that it has also been uneven across countries and sectors. He said, "advanced economies have normalized faster on the back of higher pace of vaccination and larger policy support. Emerging and developing economies are lagging due to slow access to vaccine and binding constraints on policy support. Multilateralism will lose credibility if it fails to ensure equitable access to vaccine across countries. If we can secure the health and immunity of the poor, we would have made a great leap towards inclusive growth. Global co-operation remains vital for rapid progress on this front."
According to Governor Das, the private sector is developing and manufacturing the vaccines; the Union Government is centrally procuring and supplying it; and the state governments are delivering and administering it in every nook and corner of the country. India is now administering a record of about one crore doses of the vaccine every day across all segments of the population.
He further highlighted that a major challenge to inclusiveness in the post pandemic world would come from the fillip to automation provided by the pandemic itself. Greater automation would lead to overall productivity gain, but it may also lead to slack in the labour market. Such a scenario calls for significant skilling/training of our workforce. He added, "We also need to guard against any emergence of “digital divide” as digitisation gains speed after the pandemic."
Further, he said that the need for professional human resources trained in science, technology, engineering and mathematics (STEM) is rising briskly. Major technology-based firms have expressed their intention to hire many new professionals with skills in these areas. In the short-term, the supply of such a workforce cannot be increased by the traditional educational system, and thus there is a need for close involvement of corporates in the design and implementation of courses suitable to the changing industrial landscape.
Das said, "As we recover, we must deal with the legacies of the crisis and create conditions for strong, inclusive and sustainable growth. Limiting the damage that the crisis inflicted was just the first step; our endeavour should be to ensure durable and sustainable growth in the post-pandemic future. Restoring durability of private consumption, which has remained historically the mainstay of aggregate demand, will be crucial going forward. More importantly, sustainable growth should entail building on macro fundamentals via medium term investments, sound financial systems and structural reforms."
"Towards this objective, a big push to investment in healthcare, education, innovation, physical and digital infrastructure will be required. We should also continue with further reforms in labour and product markets to encourage competition and dynamism and to benefit from pandemic induced opportunities. The Production Linked Incentive (PLI) scheme announced by the Government for certain sectors is an important initiative to boost the manufacturing sector. It is necessary that the sectors and companies which benefit from this scheme utilise this opportunity to further improve their efficiency and competitiveness. In other words, the gains from the scheme should be durable and not one off," Das said.
Finally, He said, "Again, for growth to be sustainable, a transition towards greener future will remain critical. The need for clean and efficient energy systems, disaster resilient infrastructure, and environmental sustainability cannot be overemphasised. Due consideration should be given to individual country roadmaps keeping in mind country-specific features and their stage of development while adopting policies towards climate resilience."