Post Covid-19: recovering and sustaining India’s growth

Abstract

The paper discusses past virtuous growth cycles in India and argues that the post Covid-19 macro-financial package is an opportunity to trigger another such cycle by raising marginal propensities to spend above those to save. This is feasible since the major constraints that aborted such cycles in the past are waning. Among these constraints are commodity price shocks and other supply-side bottlenecks; financial repression and discretionary allocation; and fiscal space. While the first constraint is relieved, and there is adequate progress on the others, fiscal space is still constrained. Even so, the Covid-19 crisis necessitates a large macroeconomic stimulus. In order not to overstrain government finances it should be targeted, temporary and self-limiting. Financing features can aid this as well as improve financial stability. Large government assets can be monetized to help restructure towards more effective government spending. Specific policy implications are drawn out.

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“…This was the short-term pain that India was prepared to pay for saving human lives according to the Economic Survey (GoI, 2021a). The revival of the economy was planned through a number of sequenced policies to boost demand including a targeted stimulus program and complementary supply-side policies (GoI, 2021a;Goyal, 2020). Studies have shown that prompt and timely interventions can save lives with a not too significant cost in terms of foregone economic activity (Balmford et al, 2020).…”

COVID-19 Budget Refocusing: Evidence from Indonesia

“…The crisis because of COVID-19 stimulates the macroeconomics sectors. The government should issue policies that lead to financial stability, such as government asses that are monetized to have effective and efficient restructure (Goyal, 2020). The coronavirus impacts the stock market collapse and worsens Africa's economic situation (Ozili, 2020).…”

“…The crisis occurs in India because covid-19 motivates the government to allocate macroeconomic stimulus by issuing a policy that leads to regional financial stability such as monetized government assets. It is an effort for more effective restructuring (Goyal, 2020). All the world countries have issued many policies related to handling COVID-19, such as public health management and economic risk prevention.…”

How Can Middle-income Countries Improve Their Skills Systems Post- COVID-19?

“…As in the post-war era, politicians have frequently referenced the importance of expanding vocational training opportunities in order to get society working again after the huge job losses and disruption of the pandemic (Avis et al, 2020). However, the substantial debts accumulated by many governments during the pandemic will create severe fiscal pressures in the coming years for many governments, including middle-income countries (Ejiogu, et al, 2020;Goyal, 2020). Many middle-income countries may face struggle to finance the expansion to their skills systems that will likely be required to enable them to adjust effectively to the labour market shocks of the coming decades.…”