The Covid-19 pandemic has emerged as a global challenge. The current crisis has all the qualities to be termed as a Black Swan event. However, every crisis brings with it opportunities as much as challenges. For instance, India achieving 5% or 6% GDP growth is difficult this year. The economy is likely to lose one or two quarters of business growth, says Jaspal Bindra, executive chairman, Centrum Group. But he believes India won’t get stuck in a 5% GDP growth scenario. Bindra is of the view that as a result of this crisis India can become an attractive investment destination.

Bindra, a seasoned banker with a successful multinational career spanning over three decades, was previously the Asia-Pacific head of Standard Chartered Bank after working for Bank of America & UBS earlier. Ever since Bindra joined Centrum Group, in April 2016, the Mumbai-based financial services group has diversified its fee-based businesses to a fee-cum-lending model with the introduction of housing finance, small and medium enterprises (SME) finance, and micro finance businesses.

In an email interview with Fortune India, Bindra shared his views on the opportunities that can be tapped after the crisis ends.

Edited excerpts:

Through the current Covid-19 challenges, are we facing the biggest threat to the Indian economy, since Independence?

Yes, the current challenge is actually far more severe than any other past event. For the first time, we are dealing with a situation that simultaneously puts both life and economy at risk.

At the global level, would you treat the current Black Swan event above the global financial meltdown, and also the ASEAN crisis?

A substantial number of infections and casualties are emerging from developed regions with great healthcare facilities like Europe, China and the U.S. And unprecedented sizes of stimulus packages to cater to this threat have been announced by them. The sealing of domestic and international borders preventing the free movement of capital, trade and labour is exceptional. Moreover, there is lack of policy co-ordination between nations in fighting this global pandemic. All the above suggests this to be the biggest challenge we have ever witnessed.

Do you believe that a health-related crisis has created a disproportionately worse financial problem, giving strong reasons to the finance ministry and the Reserve Bank of India (RBI) to think out of the box now?

For the first time, a crisis is going to affect every member of our society. Right from students, daily-wage earners, salaried employees, homemakers, start-ups, large corporations, and the elderly are going to be directly impacted, which is unlike any previous crisis. Hence it will need a different approach.

Could we see a paradigm shift in policy making?

The government and RBI have already shown willingness and pragmatism to meet the challenges of the emerging crisis. India has been proactive both in absolute terms as well as relative to other countries. We can definitely expect a paradigm shift in policy making going forward, at least in the near term.

In the aftermath of the Covid-19 crisis, given that the most developed economies could face recessionary challenges; do you foresee absence of strong foreign direct investment (FDI) flows to India? Will the government have to find new ways to revive, and finance the economy?

Two factors need to be considered here; first, look at alternate sources of capital, and, second, how effectively we manage the available resources. There will surely be a fiscal deficit stretch, far beyond the near 3.5% that was announced in the budget, which is understandably acceptable in the current scenario.

Additionally, surplus liquidity available in bank system, abundant household savings, and non-resident Indians’ (NRI) wealth are the available sources. Now, of all the times, we have a compulsion and not just an incentive to attract foreign capital into India.

Should we also accept the fact that India will have to possibly continue living with a 5% to 6% GDP growth—the new normal?

This year, achieving a 5% or 6% GDP growth is going to be difficult. The economy is likely to lose one or two quarters of business growth. Mathematically, it becomes impossible to recover in the remaining quarters. However, I believe that India won’t get stuck in a 5% GDP growth scenario.

In fact, as a result of this crisis India can become an attractive investment destination. Our demographics make us a strong alternate or compliment to China, for manufacturing. Lower oil prices are a major boost for India’s fiscal. Also the current weakening of the rupee should be a competitive advantage for exports. If we are able to come out of this crisis relatively better we should be able to achieve higher GDP growth going forward.

In the banking context, given that capital expenditure has seen constant decline, and lately credit growth has also been falling in sync with moderating GDP, how do you see the current liquidity boosting steps of RBI helping arrest the economic problems?

The RBI has done a commendable job in providing measures from the supply side. I am sure that if there are more steps needed, the RBI would provide them, too. The larger point that needs attention now is how quickly will the banks pass on the additional liquidity and lower interest rates to their affected, existing and potential borrowers. In such testing times banks have to act in a responsible manner with an appreciation of the enormity of the crisis.

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