The recent announcement by Arvind Subramanian, a former chief economic advisor from the Govt. of India says, India needs ₹10 trillion boosts to overcome contraction in GDP
To nullify the losses to some extent, the distribution of food and cash are the two key tools India should be used to help people. Experts like Arvind Subramanian voices out this part of the concern to the Media on Tuesday.
Further, India should plan for “substantially negative economic growth” this fiscal due to the COVID – 19 pandemic outbreaks. The government should include various sources to finance a 10trillion rupees boost. It was reported to one of the media sources that Subramanian said that the distribution of food and cash are the key factors that could jibe over the crisis.
In the videoconference!
He is the senior member at Peterson Institute for International Economics and a visiting lecturer in public policy at Harvard University’s Kennedy School of Government. Subramanian declared the above facts and figures on the key tools to overcome the GDP contraction at a videoconference.
Desperate situations call for desperate measures. The currency reserve of India had let the policymakers to take bold stands to boost without fearing a spike in the inflation.
“Prudence demands that we should plan for negative, substantially negative, economic growth rate this financial year. The scale of hardship is enormous. On the magnitude of stimulus, something like 5% of GDP, which today is about ₹10 lakh crore, is what we need to find for this year,” said Subramanian.
The negative growth!
Subramanian explained how economic management should stretch its arms for the new possibilities that aim at a substantially negative growth this year.
The risk of a substantial contraction is based on the pandemic that has gripped the world. India’s economy was decelerating even before the pandemic. The growth projections for advanced countries that implemented similar lockdown policies have adopted larger fiscal stimulus measures.
With the economy coming to a standstill due to the national lockdown imposed to contain the spread of the virus. India has witnessed an exodus of migrant workers from cities to their home states not seen in recent history.
The loss is much greater if we do not act now! The demand for goods and services should be acted upon soon after the lockdown is lifted. It might hamper the central and state government revenues, limiting their ability to offer a booster!
Subramanian added that “India should tap multiple sources including savings from spending cuts to deal with the crisis”.