MSME showing signs of revival after COVID-led degrowth: RBI Governor
New Delhi, Feb 25 (KNN) The Ministry of Micro, Small and Medium Enterprises (MSME) sector is showing signs of revival after the COVID-led degrowth in the early part of the current financial year (2020-21), Reserve Bank of India (RBI) Governor Shaktikanta Das.
"MSME has emerged as the growth engine of the economy with a vast network of about 6.33 crore enterprises contributing 30 per cent of our nominal Gross Domestic Product (GDP) and 48 per cent to exports. It shows signs of revival," he said while addressing an event on the occasion of 185th Foundation Day Celebration of Bombay Chamber of Commerce and Industry on Thursday.
He said that the sector has been rendered vulnerable by the pandemic necessitating concerted effected effects to combat the stress and focus on the revival of the sector, adding, ''the central bank made crucial interventions to support the economy's critical sector.''
Das also called for increasing digital payment and digital penetration across the country.
"As digital capabilities improve and connectivity becomes omnipresent, technological innovation and technology-driven revolution are poised to quickly and radically change India's economy," he said.
He said digital technology has the potential to raise the productivity of agriculture, manufacturing and businesses as well as improve the delivery of public services like healthcare and education.
"In the financial sector this could lead to higher financial inclusion, lesser information asymmetry and reduced credit risk," he added.
Das also observed that India was able to pull itself out of all previous pandemics within two years.
“India has seen four such severe pandemics in the past and all these were followed by contraction and deceleration in the gross domestic product (GDP). Recovery was complete within two years of the outbreaks except in 1922,” he noted.
Das added that growth became “excessively dependent on government expenditure in prior pandemics.”
On the banking sector, Das pointed out that central banks used conventional and unconventional measures to combat the impact of COVID-19 pandemic.
“The RBI did not compromise on core banking principles, unlike many other central banks. RBI purchases were confined to risk-free sovereign bonds and we will continue to support recovery by ensuring ample liquidity in the system,” the governor said.