Covid-19: Experts seek income support, cash transfer for those affected

NIPFP's Rathin Roy said that providing income support and preventing wealth disruptions is a necessary requirement in the current situation.

A number of prominent economists, including Fifteenth Finance Commission member Ashok Lahiri, agriculture expert Ashok Gulati and Rathin Roy of National Institute of Public Finance and Policy, called for more income support and direct cash transfer to help those affected by the Covid-19 pandemic and the nationwide lockdown.

The experts were speaking at industry body CII’s annual general meeting on Tuesday.

Others economists who spoke at the event included former Niti Aayog vice-chairman Arvind Panagariya and former Chief Economic Advisor Shankar Acharya.

“There is scope for intervention in terms of direct cash transfers. Proper coordination between central and state governments is crucial to ensure an effective delivery mechanism,” Lahiri said.

Lahiri also said that this was the right time for India to accelerate its inarfra spending, as there were significant deficits in infrastructure, which were likely to continue post-Covid. “Infra spending is must, as it will create employment and output simultaneously’, he said, and emphasised on the importance of a clear exit strategy and the need for a stable monetary policy.

Gulati, who is the chair professor for agriculture at ICRIER said there was a case to replace the current food subsidy regime with direct cash transfer as it would then ensure nutritional security and give more choice to growers to decide what to grow and what not to grow.

NIPFP’s Roy also echoed these views and said that providing income support and preventing wealth disruptions is a necessary requirement in the current situation. He added that a sustained recovery for India was possible if the output composition of growth for the economy could be changed, in favour of sectors such as healthcare and infrastructure, which would help revive demand in the economy. A vibrant healthcare sector, affordable housing along with a robust education sector would play key roles in India’s future growth path.

All the economists also agreed on the need to create more jobs once the economy fully opens up, a good exit plan and on boosting infrastructure investment.

“Restoring jobs should be the primary purpose of getting growth back on track as the lockdown eases. It has to be ensured that residual elements of the lockdown, for example, containment zones, should be finely and carefully designed henceforth, so as to minimize collateral damage,” said Acharya.

Speaking on the importance of external demand, which would be critical for the economic recovery, Acharya said that India should take advantage as major economies and world trade revives post-Covid, and become more export oriented and address issues related to logistics and GST refunds, among others, to further its growth prospects.

He also added that it is important for the Government and former employers to entice workers back gradually, though diversified programmes, which is critical for not only driving productivity but also to provide them with a sustainable future.

Panagariya, meanwhile, said that the Covid-19 crisis may not impact the process of globalization as much as has been feared.

He said that going forward India could be central to the process of globalization but for that it needs to open up further. He was of the view that India needs to re-visit the recent hikes in import tariffs and reduce them. It needs to stay engaged with RCEP and take the negotiations to a logical conclusion.

This in his view would not only enhance trade but also bring in the much-needed investment into the country. He also called upon India to negotiate FTA’s with Europe and the US.