Calling the present economic situation “the pralay of Hindu mythology”, former Chief Economic Advisor Arvind Subramanian, who was the chief guest at the Express Adda, said India should plan for negative growth rates in this financial year.
“There is a huge overhang of liquidity in the market already. There will be a deflationary shock. Prices will be lower than higher. This is the pralay of Hindu mythology,” he says. Subramanian says our food stocks are turning out to be equitable social safety net. “For developing countries like India, the trade off between lockdown and economic activity should be different from developed countries,” he further said.
Subramanian also said while the RBI had lowered rates and made liquidity available, what was required was actual credit flowing to the corporate sector, including small and medium firms.
Pointing out that cooperative federalism could have paved the way to more reforms, Subramanian also said if the JAM trinity could be connected to very household, it would lay the foundation of universal basic income.
Besides discussing the contours of a prudent yet compassionate macro-economic policy framework, Subramanian also spoke on the immediate and medium-term challenges facing the economy, the policy options before leaders, and the trade-offs there in.