JUMPSTARTING POST-CORONAVIRUS ECONOMY

The only way to control the raging global coronavirus pandemic, the biggest health crisis of our times, is to switch off the global economic engines through a complete lockdown and social isolation. The resultant economic pandemonium, though, is the last thing that governments want – or can afford. The dilemma leaves nations performing a balancing act, of finding answers to a very complex problem that needs health, social and economic solutions, all at the same time.

Business Today brings together five renowned names in macroeconomics, public administration and public finance for their views on how to re-start India’s post-lockdown economy when restrictions are lifted, even as the country continues to fight the disease outbreak. Here are their prescriptions.

“GIVE CREDIT, WORKING CAPITAL, EXPORT SOPS, FISCAL INCENTIVES. NOT SEQUENTIALLY, BUT SIMULTANEOUSLY”
The minimum amount required immediately is ₹5-6 lakh crore. We may need more
P. Chidambaram, former finance minister

What can be done to restart the economy? What should be the first steps post-lockdown?

The first step will be to ensure that the poor are adequately remonetised, i.e., they have enough cash in their hands to sustain themselves until they resume their jobs or self-employment. Secondly, provide enough support, including loan waivers, to micro and small enterprises to resume production and supply. Thirdly, address the needs of medium and large enterprises (organised sector) in terms of credit, working capital, export incentives, fiscal incentives, etc., to quickly ramp up production and supply. These steps have to be taken, not sequentially, but simultaneously.

What should be the ideal stimulus? How do we raise resources? Is re-allocation of ministry resources an option?

The minimum amount of money that will be required immediately is ₹5-6 lakh crore or about $80 billion. This is about 3 per cent of nominal GDP. We may need more. Resources are available within the country — through reallocation, ruthlessly cutting wasteful and vanity expenditure, higher borrowing, and monetisation of part of the deficit. The IMF has given $1 billion.

How severe will be the