Suggestions to Overcome The Economic Crisis Due to COVID - 19

Opening Statement

The economic impact of COVID - 19 is very disturbing. No one has been spared of its ill effects. Economies of about 100 plus countries have been destroyed out of which some of them have asked for monetary help from IMF. Businesses across the world namely hospitality, entertainment, aviation, etc have seen a major negative impact. Various sports events such as IPL and Olympics have been postponed. Schools and colleges have been closed. The virus has also disrupted the functioning of various online giants such as Amazon. Countries such as USA, Italy and Spain are suffering the most since their death toll is very high.

Impact of COVID - 19 on India

India is a developing economy, it is stated as an economy passing through demand depression and high unemployment, with lockdown it slowdown the supply-side accelerating the slowdown further and jeopardising the economy.

Based on recent studies, some economists have said that there is a job loss of 40 million people (MRD report) in the country, mostly in the unorganized sectors.

Earlier this week, the World Bank released its Global Economic Prospects report. It expects India’s gross domestic product (GDP) to contract by 3.2% in 2020-21. There will be a moderate recovery to 3.1% growth in 2021-22. This means that 2021-22 GDP will be less than what it was in 2019-20. To be sure, India is not the only country that will face this predicament. The East Asian region seems to be the only exception.

Suggestions By Experts to overcome The Economic Crisis due to Covid - 19

Former Prime Minister Manmohan Singh  

1.   First of the three immediate steps is to "ensure people's livelihoods are protected and they have spending power through a significant direct cash assistance".

2.  The second remedy according to Singh is to make available sufficient capital for businesses via "government-backed credit guarantee programmes".

3.  For the third step, he recommends "institutional autonomy and processes" for fixing the country's financial sector.

Former RBI Governor Raghuram Rajan 

1. Allow more flexibility in labour contracts.

2.  Stabilise tax and regulatory regimes and make them predictable

3.  Ensure power is adequately priced and metered. Encourage competition among power distributors.

4.  Disinvestment isn't primarily about raising resources. Avoid selling to already dominant family enterprises to avoid concentration of power.

5.  Ensure easier access to inputs like seeds, technology, power finance and insurance for the farmers. Allow land leasing and cooperative sharing of resources like tractors. 

 

Noble prize winner Abhijit Banerjee 

1.   Abhijit Banerjee said, "It looks very much like we are in a Keynesian downspin. Meaning, there's not enough demand. People aren't buying food. So, if I had to pick one thing the government should do is put cash in the hands of the poor. Through higher support prices for crops, through NREGS (National Rural Employment Guarantee Scheme)."

 2.  Three sectors - agriculture, power, and banking needs more attention.

      3.  We need a better business environment.

 

My Opinion

1.   The agricultural sector in India need more focus as more than 70% of rural population is engaged in agriculture-related work.  

2.  The whole world has grown a dis-trust against china and many companies are moving their business to some other country, India should try to harness this opportunity by increasing the ease of business policies and should provide them lucrative business offers.

3.  The government should reduce the GST rates on different goods and services, so people have more cash in hand which they can spend to buy different goods or services which will increase the level of demand in the economy.

Thank You

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