Fatal Python error: init_sys_streams: can't initialize sys standard streams Attribute

[snippsat]

Here how to change Environment Variables
There are User variables and System variables.
Here you see system variables Path that it point to 3.7 for me.
The same for Path in User variables
You may need to restart Pc after change,for change to take effect.

[Gribouillis]

I think the best thing to do is to remove the environment variables PYTHONPATH and PYTHONHOME from your system.

There are better alternatives than these variables if they are needed, especially the PYTHONPATH.

[FatalPythonError]

Very grateful to everyone here for taking time to understand problem and helping me. The error is gone now. Would have been forever stuck there if not for your useful insights. Thanks again everyone.

[metulburr]

what exactly did you do to fix it for possible future people with the same issue?

[FatalPythonError]

what exactly did you do to fix it for possible future people with the same issue?

Just in case if someone again faces this exact same issue I would clarify what was the problem and how it was solved.

Initially it seemed like known python bug which happens when a file is named io.py which causes conflict with standard module io, this was clearly not case here.
Member @Gribouillis here pointed out to try executing python -E and it worked. Afterwards @metulburr again pointed out this behavior is not normal for fresh python installations. This clearly meant something was wrong with PYTHONPATH in environment variables.

What I did next was to remove all python paths from paths in environment variables(check @snippsat's screenshot for reference). Then uninstalled current python version. It is important to get rid of all paths to python installation before reinstalling because error occurred due to a invalid (likely due to change in installation directory) python path in paths. This completely solved the problem.

Also to reiterate what @Gribouillis said it was probably bad idea to add PYTHONPATH to system in first place.