In an interaction with BBC via e-mail, Manmohan Singh called economic slowdown, an inevitable situation in the country as “a humanitarian crisis” and that the Govt’s shock and awe approach has caused tremendous pain to the people.
Stressing the slow and prolonged economic conditions as “inevitable” in India, on Monday ex-PM suggested three steps that Narendra Modi led NDA Govt should follow in order to cope with damages caused due to corona-virus pandemic this year.
In an e-mail interaction with the BBC, Congress leader Manmohan Singh said that economic slowdown in the country is “a humanitarian crisis” and that the “government’s shock and awe approach to the lockdown has caused tremendous pain to people.” “Perhaps a lockdown at that stage was an inevitable choice. The suddenness of the announcement and the stringency of the lockdown were thoughtless and insensitive,” Singh said.
The former prime minister and also former finance minister who freed India from License Raj, one of the reasons for slow economic growth and corruptions for decades. He liberalized the Indian economy allowing it to speed up the growth dramatically, laid out three steps to cope up with the economic damages and bringing it back to normalcy in coming years.
According to Singh, the government must “ensure people’s livelihoods are protected and they have spending power through significant direct cash assistance”. The Centre must also make adequate capital available for businesses through “government-backed credit guarantee programmes”. Thirdly, Singh said, the government should fix the financial sector through “institutional autonomy and processes.”
Talking about direct cash transfer, he said “high-borrowing” is inevitable and that will increase the debt-GDP ratio,
(The higher the debt-to-GDP ratio, the less likely the country will pay back its debt and the higher its risk of default. A study by the World Bank found that if the debt-to-GDP ratio of a country exceeds 77% for an extended period of time, it slows economic growth.)
but if borrowing “can restore livelihoods, save lives, borders and boost economic growth, then it’s worth it”, he said. “We must not be shy of borrowing but we must be prudent on how we use that borrowing,” the BBC quoted Singh as saying.
Manmohan also warned India in following some nations in becoming protectionist economy- imposing high trade barriers duties on imports. India’s trade policy over the last three decades had brought “enormous economic gains to not just the top but across all sections of our population”, he said. “I do not want to use words like ‘depression’ in a cavalier fashion,” Dr Singh said, but a “deep and prolonged economic slowdown” was “inevitable”.
The Indian economy was already struggling with its’s slowest pace in a decade, GDP at 4.2% in 2019-20. Many economists formed a consensus over an economic contraction, “which if it happens, will be the first time in independent India,” Singh said.
“I hope the consensus is wrong,” he added.
The country is slowly unlocking economy after prolonged lockdown, Nirmala Sitharaman has announced a liquidity injection of Rs 20 lac-crore package to cushion the impact of pandemic on country’s economy.
Sources & Credits: The Indian Express
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