The Center of Financial Studies (CFS) organized an engrossing webinar on the topic, ‘Indian Economy: Navigating Through A Crisis’ on May 27th, featuring leading economic thinkers, Dr Montek Singh Ahluwalia, Former Deputy Chairman, Planning Commission and Dr Duvvuri Subbarao, Former Governor, RBI. The session moderated by Professor Ananth Narayan saw the two distinguished personalities give their take on India’s economic situation and the way forward, in light of the Covid-19 pandemic.
Touching upon a variety of topics, Dr Subbarao was of the view that the country’s economy could expand by around 5% in the next financial post lockdown once the economy is allowed to start, despite fiscal 2021 likely to see India’s worst recession since independence in the wake of the Covid19 pandemic as the economy is likely to contract by 5% this fiscal according to rating agency Crisil.
Dr. Ahluwalia concurred saying there could be a likely growth of 5-6 % in fiscal 2021-22 but cautioned against calling it a recovery as it will come in the back of the economy contracting this fiscal year. He said it’s imperative for the Indian government to look beyond the usual textbook solutions to restore the health of the economy.
Dr Subbarao also praised the government for its decision of additional borrowing this fiscal saying, “I, for one, believe that the government should borrow more in order to spend more. That is a moral and political imperative. But I don’t support the view that the government should resort to open ended borrowing”.
Both speakers praised the measures taken by RBI to handle the crisis, but differed on the extent of the government’s fiscal measures. Dr. Ahluwalia wants another 1% the gross domestic product as a direct stimulus primarily focused on health. Dr. Subbarao on the other hand saw the fiscal response as adequate in the given constraints.
Dr. Ahluwalia also urged for long overdue tax reforms saying, “We should now set up a truly high level multi-disciplinary committee of people advising the kind of tax policy to be announced in the next budget. It should include a serious re-examination of the GST where there are huge leakages taking place for a variety of reasons.”
The 1.5 hours webinar session saw both speakers talk on a variety of topics such as the setting up of a ‘Bad Banks’, the extent of government’s support to public sector banks and NBFCs, the restructuring of loans, NPAs and the overall monetary and fiscal policies.
The webinar has received substantial press coverage by leading Indian publications.
You can watch the recording of the entire webinar here: https://www.youtube.com/watch?v=L-1mR6dKul4&feature=youtu.be