New Delhi: Being a responsible organisation with a rich 100-year heritage, the ASSOCHAM is reaching out to its wide base of over 450,000 industry and trade members to work in close coordination with the Central and State Governments in dealing with the global pandemic of Coronavirus, and follow the medical and health protocols as prescribed by the authorities to be on top of the unprecedented situation, backed by strong cushions like large foreign exchange reserves, available with the policy makers, the Chamber Secretary General Mr Deepak Sood has said.
“While India has so far dealt with the global health crisis in a proactive manner in a perfect coordination between different Union ministries like Health and External Affairs along with state authorities, we in the industry have to join in this drive to ensure that no panic is created in our financial markets which have a robust institutional strength. With strong foreign exchange reserves of USD 487 billion as on March 6, 2020 and narrow current account deficit of USD 1.4 billion (as per the latest Q3 2019-20 data), India can confidently face the challenges of financial stability arising from global turmoil,” said the ASSOCHAM Secretary General.
It is true that in an environment of sell-off in the global equities, investors are seeking safe haven in gold and dollar assets, the USD is rising more as asset class, rather than a currency. “On the other hand, a meltdown in the crude oil prices to mid- 30s dollar a barrel, more than makes up to a rise in dollar as we are a net importer,” he said. The RBI data for April-December, 2019-20 clearly points out that Foreign Direct Investment, considered the most stable, contributed USD 32 billion for the period while the Foreign Portfolio Investors (FPI) who keep shuffling portfolios in the financial markets, made less than half of this at USD 15 billion. “Our sources of foreign exchange are more of stable nature. With the country’s import bill set to go down, we should continue to have a comfortable current account position, providing a fundamental strength to the Indian economy.”
Meanwhile the ASSOCHAM is reaching out its vast membership to continue with their businesses, using unconventional ways and digital infrastructure more effectively to mitigate the Coronavirus impact. Some of the sectors like pharmaceuticals are rising up to the challenges with the support of the government. For instance, the recent direction from the Ministry of Environment to grant quick clearances for manufacturing facilities of the Active Pharmaceutical Ingredients (APIs) is a welcome move.
Similarly, even as mismatches in US dollar liquidity have become ‘accentuated’ across the world, the RBI has moved in with a USD sell/buy swaps to the foreign exchange market. RBI’s statement that it stands ready to mitigate the impact of Coronavirus on Indian economy, is ‘re-assuring’.
Mr Sood said the efforts of the Ministry of External Affairs to evacuate Indians stranded in different parts of the world and reach out to other parts with medical facilities are laudable, while the appeal of Prime Minister Shri Narendra Modi not to panic but stay cautious should be followed in the right earnest. Likewise, different preventive measures by states should also be supported by the industry. Besides, as pointed out by Finance Minister Mrs Nirmala Sitharaman, different ministries are in consultations with different sectors affected by Coronavirus and the government would respond after the exercise is complete.