With the gradual unlock of the lockdown restrictions kicking in across various parts of the country, there are slim hopes of slow improvement in the economy. While some State Government are battling surges and the daily rise of new Covid-19 cases breaking new records, the Government is actively considering various options to maintain financial stability in view of the economic contraction forecasted by various international financial institutions. It has taken financial assistance from the Asian Development Bank. The Government is also taking decisions on implementing some of the policies it was working on before Covid-19 and the ensuing emergency situation shifted its focus. One such policy is the National Education Policy.

RBI Releases Financial Stability Report – The Reserve Bank of India (RBI) recently released its Financial Stability Report. The highlights of the report include that in response to Covid-19, a combination of fiscal, monetary and regulatory interventions on an unprecedented scale has ensured normal functioning of financial markets. The overleveraged non-financial sector, simmering global geopolitical tensions, and economic losses on account of the pandemic are major downside risks to global economic prospects. Actions undertaken by financial sector regulators and the Government to mitigate the impact of Covid-19 eased operational constraints and helped in maintaining market integrity and resilience in the face of severe risk aversion. Bank credit, which had considerably weakened during the first half of 2019-20, slid down further in the subsequent period with the moderation becoming broad-based across bank groups. In the period of social distancing, information technology platforms have worked well and these gains need to be consolidated. There is no room for complacency on cyber security. Going forward, the major challenges include pandemic-proofing large sections of society, especially those that tend to get excluded in formal financial intermediation. The challenges that lie ahead have to be addressed with the overarching objective of preserving long term stability of the financial system, which is critical for nurturing the recovery. Going forward, once we enter the post-pandemic phase, the focus would be on calibrated unwinding of regulatory and other dispensations. Financial intermediaries will have to undertake reappraisal of their business models. Asset markets have to adapt to a new normal in a non-disruptive manner. Contagion risks warrant constant vigilance by all stakeholders in the financial system.

PM Meets Financial Regulators – Prime Minister Narendra Modi recently met financial sector regulators and discussed preparedness to deal with the post-covid world and further measures that the government can take to boost economic recovery while maintaining financial stability in the system. The meeting was attended by chiefs of Reserve Bank of India, Securities and Exchange Board of India, Insurance Regulatory and Development Authority and Pension Fund Regulatory and Development Authority of India. Finance minister Nirmala Sitharaman, defence minister Rajnath Singh along with road, transport and highways minister Nitin Garkari were present in the meeting.The meeting also comes at a time when government is preparing another round of fiscal stimulus to boost economic recovery at a time rising cases of covid-19 is believed to have plateaued economic recovery. In the last two weeks, Modi chaired series of meeting with top officials from the finance ministry, Prime Minister’s Economic Advisory Council, government’s policy think tank NITI Aayog as well as the commerce ministry to draw up a strategy and action points towards revival of the Indian economy and the way ahead.

ADB Provides Financial Support – The Asian Development Bank (ADB) has approved a $3 million grant to India from its Asia Pacific Disaster Response Fund (APDRF) to further support the government’s emergency response to the coronavirus disease (Covid-19) pandemic. “The new grant complements ADB’s ongoing support to the Government of India in strengthening its Covid-19 response,” said ADB Director for Human and Social Development for South Asia Sungsup Ra. “This support will enhance disease surveillance and help in early detection, contact tracing, and treatment. This will be further supplemented by other public health measures.” The grant, which is financed by the Government of Japan, will be used to procure thermal scanners and essential commodities to strengthen the Government of India’s Covid-19 response. On 28  April, ADB approved a $1.5 billion Covid-19 Active Response and Expenditure Support (CARES) Program to support India in its immediate pandemic response efforts, including disease containment and prevention, as well as social protection measures for the poor and economically vulnerable, particularly women and disadvantaged groups.

Top Foreign Universities May Enter India – The Union Cabinet chaired by the Prime Minister Narendra Modi recently approved the National Education Policy 2020. The new policy aims to pave way for transformational reforms in school and higher education systems in the country. The policy provides that selected universities e.g., those from among the top 100 universities in the world will be facilitated to operate in India. A legislative framework facilitating such entry will be put in place, and such universities will be given special dispensation regarding regulatory, governance, and content norms on par with other autonomous institutions of India. Furthermore, research collaboration and student exchanges between Indian institutions and global institutions will be promoted through special efforts.

Posted by Sourish Mohan Mitra

Sourish Mohan Mitra is an India-qualified lawyer from Symbiosis Law School, Pune and currently working as an in-house counsel with a global research firm in Delhi, India; views expressed are personal; he can be reached at sourish24x7@gmail.com; Twitter: @sourish247

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