In an exclusive conversation with India Today as part of the E-Conclave Jumpstart India Series, India’s top economic brains share their strategies to save lives and livelihoods from the crisis imposed by the Covid-19 outbreak.
E-Conclave: K Subramanian, Montek Singh Ahluwalia on how to save lives and livelihoods during Covid-19 outbreak
The Covid-19 outbreak has posed tremendous health as well as an economic challenge before India. While the government races to boost the health infrastructure of the country, it faces the mega challenge of saving the economy.
The nationwide lockdown, imposed to arrest the spread of the deadly virus, has crippled the economy. Industries are incurring heavy losses and workforce staring at job cuts.
As per a study the Covid-19 crisis led to a spike in the country’s unemployment rate to 27.11 per cent by May 3.
To discuss how Indian plans and how it should strategise to save lives as well as livelihoods, Indian Today TV welcomes Chief Economic Advisor to the Indian government K Subramanian and former Deputy Chairman Planning Commission Montek Singh Ahluwalia.
Here is what they have to say:
Q: When can the country expect the much-talked-about second stimulus package?
K Subramanian: It should be coming any time soon.
Q: What are the government’s priorities in terms of what help can be extended and what not?
K Subramanian: The pandemic is a demand-side shock. Households may not be consuming discretionary items like a car or a house. Similarly, companies are also holing back their investments. On the demand side, the problem manifests when firms run into difficulties in terms of cash flows. Therefore, the government’s focus is on the demand side. That is why the first part of the stimulus package was focussed on the vulnerable sections, for whom the marginal incomes impact the consumption behaviour. The second part is now focussed on the economy, especially some of the supply side aspects.
Q: How do you hope to stimulate demand?
K Subramanian: The government has already initiated direct benefit transfers. Here, we have to keep in mind the enormous benefit that has accrued to the Indian economy from the JAM [Jan Dhan-Aadhaar-Mobile] trinity that has enabled the money to reach the accounts of the vulnerable sections with just a click. In contrast, an advanced economy like the US is printing the checks and mailing them to each beneficiary. The Jan Dhan accounts have helped money reach the beneficiaries and that’s where the demand is most crucial.