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Coronavirus outbreak to have limited impact on India: Shaktikanta Das
Feb-20-2020

Easing concerns over coronavirus outbreak, the Reserve Bank of India (RBI) Governor Shaktikanta Das has said that it will have a limited impact on India but the global Gross Domestic Product (GDP) and trade will definitely get affected due to the large size of the Chinese economy. He added that only a couple of sectors in India are likely to see some disruptions but alternatives are being explored to overcome those issues. The deadly virus has brought a large part of the world's second-largest economy China to a standstill and its impact has been felt across industries.

The Governor said the country’s pharmaceutical and electronic manufacturing sectors are dependent on China for inputs and they may be impacted. He also said it is definitely an issue which needs to be closely monitored by every policymaker whether in India or any other country. Every policymaker, every monetary authority needs to keep a very close watch. So coronavirus issue needs to be closely watched. He said a similar problem, perhaps on a lower scale, occurred last time during the outbreak of Severe Acute Respiratory Syndrome (SARS) in 2003, and added that the Chinese economy had slowed down by about 1% during that time.

Das said for India, China is an important trading partner and policymakers both in the government and the monetary authority are very watchful of the developments that are taking place. He further said if the Chinese authorities are able to contain the problem, the impact on the global economy and on India will be minimised. On the impact on India, he said the pharmaceutical sector is sourcing raw materials from China. Most of the large pharma companies, according to information that we have, always keep stock for three-four months.

Therefore, he said they should be able to manage and also those provinces from where these pharma intermediates are sourced have not been impacted by the virus outbreak. Therefore, he said there is an expectation that the supply of pharma raw materials will be maintained. He noted that India exports iron ore to China and it could be impacted. He said but in economics, something negative in one place always works positive elsewhere. So if your iron ore exports are impacted, then perhaps the raw material supply to local domestic steel manufacturers will be at reduced costs. So their cost of production may go down.

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