Prominent economists advocated the need for restoring jobs, cash transfers and providing income support along with substantial infrastructure spending, for reviving demand and a sustained recovery of the Indian economy post-Covid, while speaking on the session “Growth and Beyond: Getting the Math Right for the New Growth Order” in CII’s Annual Session 2020 “Getting Growth Back”, that was held on a virtual platform on 2nd June, 2020.
Dr. Shankar Acharya, Honorary Professor, ICRIER, while stressing on the fact that the lockdown took a massive hit on both employment and output, stated that “restoring jobs should be the primary purpose of getting growth back on track” as the lockdown eases. He added that, it has to be ensured that residual elements of the lockdown, for example, containment zones, should be finely and carefully designed henceforth, so as to minimize collateral damage.
Speaking on the importance of external demand, which would be critical for the economic recovery, Dr. Shankar Acharya added that India should take advantage as major economies and world trade revives post-Covid, and become more export oriented and address issues related to logistics and GST refunds, among others, to further its growth prospects.
He also added that it is important for the Government and former employers to entice workers back gradually, though diversified programmes, which is critical for not only driving productivity but also to provide them with a sustainable future.
Dr. Ashok Kumar Lahiri, Member, Fifteenth Finance Commission, stated that “there is scope for intervention in terms of direct cash transfers”. In this context, he stressed on the importance of coordination between Central and State Governments to ensure an effective delivery mechanism.
This is also the right time for India to accelerate its infra spending, as there are significant deficits in infrastructure, which is likely to continue post-Covid, Dr. Lahiri added. “Infra spending is must, as it will create employment and output simultaneously’, he added.
Dr. Lahiri also emphasised on the importance of a clear exit strategy and the need for a stable monetary policy, while speaking on the occasion.
Dr. Rathin Roy, Director, National Institute of Public Finance and Policy, while speaking on the session stated that providing income support and preventing wealth disruptions is a necessary requirement in the current situation.
He further added that a sustained recovery for India was possible if the output composition of growth for the economy could be changed, in favour of sectors such as healthcare and infrastructure, which would help revive demand in the economy. A vibrant healthcare sector, affordable housing along with a robust education sector would play key roles in India’s future growth path.
Replying to a question on whether India could continue to be self-reliant while also being export oriented at the same time, Dr. Roy stated that India has the potential to become a world class exporter provided that it is able to develop products without subsidies and meet domestic demand for everyone in the country, in a competitive manner.
While the economists differed in their growth forecasts and projections for the Indian economy for the current as well as next year, they agreed on the importance of infrastructure spending for stimulating demand and growth in the economy.
Dr. Naushad Forbes, Past President, CII and co-chairman, Forbes Marshall, while speaking on the current crisis, stated that “we are facing an unprecedented health situation which is also unprecedented in its response too, as more than 60% of the world was in a lockdown” since April.
June 02, 2020
New Delhi