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BUDDHA ACADEMY TIKAMGARH (MP) || ☺ || ༺•|✤सुबोध खरे संचालक बुद्ध अकादमी✤|•༻

created Apr 4th 2020, 06:56 by SaLmanSK


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coronavirus, indian economy, coronavirus impact on indian economy, arvind subramanian, indian agriculture The government should consider a Solidarity Fund with a one-time annual contribution coming from the wealthy and the employees in the organised sector. The current crisis is so terrible in its toll of life and livelihoods that the need of the hour must be minimising the health, humanitarian and economic costs, especially for the most vulnerable. Rising public expenditures to help tens of millions of workers and their families alongside plummeting resources will inevitably force hard choices. Appropriately, much of the policy discussion and the government's first response have focussed on addressing the immediate imperatives. But this crisis is also an opportunity to do things that are not only good for now but for the medium term as well. We discuss a few.
 
Revamp macro-fiscal framework If the pandemic follows the exponential trajectory seen in other countries, the crisis is going to entail massive fiscal expenditures, perhaps up to 4-5 per cent of GDP, much more than what the government has announced. Consequently, the basic macro-fiscal framework for example, the Centre's FRBM target of 3.5 per cent of GDP, and the revenue and deficit estimates for 2020-21 has been fundamentally overtaken by events. The Centre should immediately announce that even the states will be allowed to exceed their fiscal responsibility legislation targets because they will be in the front line of taking action against the pandemic. The crisis is an opportunity to revisit the entire framework. The focus on unattainable targets, the fact that the FRBM has been honoured only in the breach, and the consequences in terms of loss in budgetary integrity and transparency need serious review, even overhaul. Once the crisis ebbs, India might be looking at overall deficits well in excess of 10 per cent and debt levels much greater than those today. If the starting point is going to be so different, do the old goals and targets retain meaning?
 
Remake finance Going into the crisis, India's corporate and financial sector were under severe stress the so-called Four Balance Sheet problem. This crisis will unfortunately add consumers and small and medium enterprises to that list. This will be an extremely hard but critical  problem to address. To allow banks to revert to normalcy, a largescale takeover of their bad loans will be unavoidable not least because the current bankruptcy process will be severely inadequate. In addition, this crisis opens the door for the new lending model proposed by Nandan Nilekani technology-driven lending that uses data rather than collateral, allowing the 10 million-odd businesses with deep digital footprints to get loans from the thriving ecosystem of new financial players.
 
 

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