Blueprint for a post-pandemic economy (What to do once the viral pandemic comes to an end)

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 Blueprint for a post-pandemic economy (What to do once the viral pandemic comes to an end)

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Read more on - Polity | Economy | Schemes | S&T | Environment

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• Economy after the lockdown: The national economy will be substantially weakened in this entire virus battle. Although the Indian economy was weakened already, but it is not a comorbid condition at all. It remains resilient.
• Survival and revival: The key tasks for India now are "survival" and "revival", and not "expansion and growth".

1. The fundamental issues need to be fixed now - banking, inflation, capital productivity, etc.
2. Double-digit growth dreams need to wait.

• Bonds for growth: The government can issue long-term bonds to collect funds for revival, from global markets. The problem will be that sovereign funds would be focussing on their own nations now, and private investors may wish to avoid subscribing to long-duration debt.
• Six pillars of supporting the economy:

1. Focus on women - Over time, the trickle down effect has not really worked as well as imagined, and income inequality has only worsened. Now, through 2-3 per cent of additional fiscal support (of GDP), the govt. has to ensure proper food, healthcare and livelihoods for the common people. A restructured Mudra scheme will help.
2. Banking and finance - The real economy will feel pain, and that will transfer soon to the banking system. The immediate liquidity concerns are already taken care of by the RBI, but deeper NPA issues will surface quickly. Both private banks and cooperative banks are vulnerable. Give 10-15 yrs long support to banks (repayable) to avoid case-specific bailout packages. An operationally autonomous holding company for all PSBs' shareholding will work wonders.
3. Currency stability: India's large forex reserves are a good cushion against any collapse in rupee, but maintaining fiscal caution and ensuring ratings strength will remain the key.
4. MSME sector: Support those MSMEs that have a good history, via equity or quasi-equity. For that, give additional capital to SIDBI and let it work like the earlier development banking institutions.
5. Capital productivity: Close down unviable PSUs and invest in public expenditure when returns are assured. Invest more in brownfield assets like railways and power transmission.
6. Use the crisis: In this dire situation, push economic reforms as hard as possible, and cut red tape. Push more investments. And avoid all controversial political and social agendas.

• Summary : There is a mix of policy prescriptions that will help India tide over the economic crisis that will surely unfold in days to come.

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