India should release an economic package of not less than 5 per cent of its GDP as the growth rate may drop to 2.1 per cent in 2020-21 due to the impact of coronavirus infection, an expert said on Wednesday.
Narendra Jadhav, a Rajya Sabha MP and former RBI chief economist, said the principle objective of the government should be to save lives now and save livelihoods in the immediate future.
"Due to Covid-19, India's GDP growth rate will take a hit and may come down to 2.1 per cent from 4.5 per cent...India should release an economic package which should not be less than 5 per cent of its GDP soon," he said during an online address to theMasters' Union School of Business.
Jadhavalso highlighted a host of policy measures that the government should take in these times including relaxing the Fiscal Responsibility and Budget Management Act (FRBM ACT), letting the fiscal deficit rise for 1 year, relaxing the limits on the debt that can be raised by the states and taking away MPLAD funds for 2 years.
He pointed out that due to the Spanish Flu outbreak in 1918, the global GDP came down by about 6 per cent.
"But with the crisis at hand, the GDP of the world will come down by 2.2 per cent which looks small but is incredible in terms of the size and travesty it can cause," Jadhav noted.
The IMF on Tuesday projected a GDP growth of 1.9 per cent for India in 2020.
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