Kotak Mahindra CEO Uday Kotak warns of economic stress for India amid Covid-19

Billionaire banker Uday Kotak has cited a rough ride for the Indian economy amid rising cases of Covid-19. India is currently battling the rising third wave of the COVID-19 pandemic powered by the new Omron version. New restrictions on mobility have been imposed across the country as cases rise, which has significantly impacted economic activity.

Kotak Mahindra Bank CEO Uday Kotak has expressed the possibility of chills through a question in a tweet. He has talked about the unexpected consequences of COVID-19 and their impact on the economy.

“The unforeseen consequence of Covid is shortage of supplies. As inflation turns from transitory to structural, central banks around the world could panic and catch up. Inflation also affects governments. Omicron Might Delay It, But Is The ‘Goldilocks’ Of Low Interest Rates Over? Kotak tweeted.

What Kotak is pointing to is rising inflation in the economies and disruption in the supply chain. This will result in the end of the ‘Goldilocks’ phase of the Indian economy.

‘Goldilocks’ is a term taken from a children’s story ‘Goldilocks and the Three Bears’. In financial terminology, ‘Goldilocks’ is used to represent an economy that is in ideal condition, featuring high growth rates and low interest rates.

To maintain this ideal ‘Goldilocks’ state of the economy, the government needs to invest money in various infrastructural projects and formulate favorable tax policies. However, this can only work if central banks update their monetary policies and align them with the upward movement of the economy.

Earlier this month, Kotak advised governments not to resort to printing more money when economies suffer losses due to the Omicron outbreak. “60% of world reserves in US dollars. An extraordinary privilege that grants America a liberal (reckless?) with printing money, fiscal and current account deficits, military spending. “In other countries it is better not to try to walk in American shoes!” She wrote

Due to the COVID-19 pandemic, the Indian economy is witnessing turmoil and the current Omicron lead wave has worsened the situation.

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