Dr. Manmohan Singh former Prime Minister has proffered three steps in to restore the countries financial health as a rampaging COVID-19 pandemic laying to waste India’s economy. Manmohan Singh who was a long term congress stalwart who is often credited as the architect of India’s reforms program suggested direct cash assistance to protect livelihoods and to retain spending powers, government-backed trade guarantee schemes to make the capital available for the businesses and the institutional autonomy to fix the financial sector.
During a conversation with the BBC, Singh said that he does not want to use words like “depression, in a cavalier fashion adding that a deep and prolonged economic lockdown was inevitable. He also explains that such an economic slow down is caused by a humanitarian crisis and it is very important to view this economic slowdown from the prism of the sentiment in our society than the mere economic numbers and methods. During the sharp rise of COVID-19 pandemic in India Sing came with this warning and also during when the economist predicts that the countries GDP for FY2020-21 may sharply contract to lead to the worst technical recession in almost 50 years. He also said that borrowing is the answer to fund direct cash transfers to help businesses with capital and credit.
Even if we have to spend an additional 10 percent of GDP ( Gross Domestic Product) to the military health and economic challenges, higher borrowing is inevitable. The Country must be prudent rather than being shy from borrowing, if the borrowing can save the lives boarders restore livelihood and can boost economic growth then it is worth it, he expounded while talking about the fear around India’s high debt to GDP ratio. Singh also pointed out that in the past the Global economies have gone through the crisis with proven economic tools, but now we are facing an economic crisis caused by the COVID-19 pandemic which has induced fear and uncertainty in society and monetary policy as an economic tool to counter this crisis is proved to be blunt.
Including Abhijith Banerjee Nobel price winning academic all the prominent economies believed that India should not be afraid to print money to fund welfare benefit. To fund government spending many countries have already decided to print money. Singh thinks that the deep inter-linkages that now we are facing with the world are a cause of concern. In this widespread pandemic situation, the global economy is severely dented and that will be a big cause of concern for India.