India has plenty of space to cut interest rates as well as offer a fiscal stimulus, the government’s principal economic adviser said, and the main goal is to ensure that the nations economy doesn’t seize up amid a shutdown to contain the coronavirus.

Policy makers immediate focus is ensuring Indians have cash in hand to buy essentials, Sanjeev Sanyal said in an interview in New Delhi on Friday. They are also aware that India faces waves of default if cash flows aren’t maintained, he said.

Let me assure, whatever it takes to keep the cash flow going in the economy will be done, Sanyal said. We need to make sure that when we are past the health storm, we still have an economy that has not gotten gridlocked. Because unwinding that would be more difficult.

Prime Minister Narendra Modi and state leaders over the weekend imposed an almost-complete lockdown, which will probably worsen an economy already set to slow to an 11-year low. The central bank, which is due to decide on interest rates April 3, is injecting both rupee- and dollar-liquidity and has pledged to do more to ensure financial markets function smoothly.

Policy makers are taking comfort from India’s $482 billion of foreign-exchange reserves, the smallest current-account deficit since 2016, and inflation that is set to ease in coming months, Sanyal said. He added that while India has pledged to contain its budget deficit, that goal is self-imposed and if necessary we will deploy fiscal resources too.

The urgency stems from the fact that Indian companies have a record ₹5.9 lakh crore of local notes maturing this year. The economic slowdown combined with global risk averseness has made it harder to repay or refinance; the yield on top-rated three-year corporate bonds hit a three-month high last week.

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