RBI<\/a>), Kotak said he would not be too worried on how the rating agencies perceived the widening fiscal deficit. \u201c\u2026rather than being in denial, we must focus on the areas where we can improve. Here, investments in healthcare and education are the foundations for India\u2019s future,\u201d he said, adding that the government and industry should not worry too much about the current fiscal year\u2019s slowdown, and instead plan and work towards a medium-term growth strategy.<\/p>\nAt the same time, there will be costs that cannot be borne by businesses or the government, but will be borne by the financial sector, Kotak said. \u201cThe banking sector\u2019s loan book is about Rs 100 lakh crore and the total capital of all banks in India is about `11-12 lakh crore. So, if 4-5% of loans turn bad due to Covid, the capital position of the banking sector will get impacted by around 40%. There will be some mark-to-market gains as bond yields have dropped. Still, the financial sector will need to be recapitalised,\u201d Kotak said.<\/p>\n
India must grasp its opportunity in the new normal, the veteran banker said. Work from home (WFH) and maintaining social distance are ways of life now. \u201cBut the shifts from physical to digital, and urban to rural migration open new vistas. Not only can India strive for manufacturing shifts from the world\u2019s factory, China, but we can also become the front and back office of the world,\u201d Kotak said. He added that in the short term, there will be uncertainty around job security and salary levels. Habits will change, as will demand patterns. Digital adoption will grow exponentially, and business models will undergo changes. Darwin\u2019s theory of biological evolution will come into play: Only the quickest to evolve and adapt will survive and prosper,\u201d he said.<\/p>\n
![\"The](\"https:\/\/images.financialexpress.com\/2020\/07\/1-314.jpg\")
![\"\"](\"https:\/\/images.financialexpress.com\/2020\/04\/telegram.png\")