Economist Dr Raman Agrawalla is widely known at home and abroad. A PhD in Economics from the University of Delhi, he has more than two decades of academic and industry experience. Since 2005, he has been handling many key positions at the Tata Consultancy Services. He has delivered invited lectures and keynote addresses at many reputed business schools, universities and national and international forums. He is a Professional Member, American Economic Association and a Senior Member of the IEEE. He is a life member of All India Management Association (AIMA), Indian Science Congress Association and Indian Econometrics Society. And he is a poet and a systems thinker and takes interest in multidisciplinary studies. He is named as a “Leading Scientist of the World 2013” by International Biographical Centre, Cambridge, England. Since 2019, he is a Board Member of International Association for Management of Technology (IAMOT). In an interview to The Pioneer, he spoke to Sugyan Choudhury on the economic scenario in the country arising out of the Covid-19 pandemic.
What’s the impact of Covid-19 and lockdowns on the economy?
The Covid-19 has wrought unprecedented havoc across economies globally. Till the end of 2019, the global economy was trying to tide over the recessionary conditions; and then, in March 2020 the coronavirus struck as a pandemic further crippling the economies. The global economy may see a negative growth of around 2.5%-3.5% in 2020 first half at least and a similar gloomy growth outlook looms large over the Indian economy in the first half of 2020-21. World services trade has deteriorated in the first quarter of 2020 owing to a broad-based loss of momentum in passenger air travel, container shipping, financial and ICT services. The value of global trade has already contracted by over 3% so far in 2020. The WTO estimates that the volume of world trade can shrink by 13%-32% in 2020. India’s merchandise exports plunged by 60.3% in April 2020 while imports contracted by 58.6%. The economy is in a vicious cycle of low demand, low income, low growth, low production and low supplies.
How do you look at the governmental measures to tackle the crisis?
Saving the lives was important. Now, it is equally important to save the livelihoods. In this context, let’s briefly analyse the efforts of the authorities. I would like to look at it from the following perspective: how the people and the economy can survive, revive and thrive in the ongoing Covid-19 time and in the post-Covid-19 world order.
On May 12, PM Mr Modi announced an economic stimulus package of over Rs 20 Lakh crore amounting to around 10% of India’s GDP (including the RBI package in terms of liquidity and monetary measures) and articulated a vision of ‘Atmanirbhar Bharat’ based on five pillars of technology, infrastructure, demography, economy and demand. It has potential to help India thrive and flourish. But first, it is important to ensure survival and revival. To jumpstart the economy, you need a sudden start and a big push simultaneously. The best strategy and policy actions should be to break the vicious circle inducing and increasing the aggregate demand in the economy. To ensure that, let people, especially the vulnerable and most-affected sections and sectors of the economy survive the crisis, increase income in the hands of people who tend to spend more but cannot spend now given the low level of their disposable income. It will help achieve two objectives simultaneously. It will protect lives of poorer people as they can survive buying their basic necessities. It will kick-start the demand inducement cycle in the economy. Thus I see the efforts as India’s ‘New Deal’ moment. I must say the State Government’s efforts have been praiseworthy in handling the Covid-19 situation and dealing with Cyclone Amphan. However, it is important to create, recreate and re-imagine the Odisha Vision 2036 that marks the State’s centenary celebrations. We should have a foolproof strategy, means and mechanisms in place to have a way of creating an Odisha without any poor; without any people migrating because of lack of economic opportunities in the State. It is important to create a thriving Odisha economy which is self-reliant in every sense of the term.
What are your views on the plight of the migrant labourers rendered jobless?
The situation has created mega miseries and sufferings for the migrant labourers. As per an estimate, there are around 8 crore migrant labourers in India. It was very essential to provide for food security of the migrants. Towards this end, the Government is providing free ration of food grains and pulses to them. Further, the migrants are being given wage employment under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) when they return to their native places. The government has increased allocation under the MGNREGS by Rs 40,000 crore to Rs 1 lakh crore. Bulks of migrants have returned to their States like UP, Bihar, Rajasthan, Chhattisgarh and Odisha. In these States, the number of enrolments for work under the MGNREGS has increased nearly twenty times from April 1 to May 21. I think it is also important to ensure some cash transfer through direct benefit transfers to migrants to help them meet their some other basic necessities. Further, a self-reliant India would like its migrants to have aspirations to stand on their own legs. It may require initial cash supports.
What would you recommend to the State and Central Governments and policymakers?
The corona crisis offers lessons to the Governments to work in harmony. The Governments and policymakers should earmark a certain fund just to be distributed as a type of ‘minimum basic income’ for an appropriate period of time as direct cash transfers, specially to the vulnerable people like migrant workers, daily wage earners and poor, who face such dire problems. The lesson is to create a correct database of migrants with Aadhaar-linked bank details to ensure DBTs without leakage. I feel government is interested and working towards creating economic opportunities and helping the stakeholders in terms of resources, financing, infrastructure and credit guarantees, etc. so that the revival in the economy is achieved in a sustained way.
To sum up, lockdowns and economic activities are inversely proportional to each other. So, the quicker lockdowns are lifted, the faster will be the return of vibrancy to economic activities. I see a turnaround in the economy by the end of 2020 assuming that corona will be contained effectively eliminating the possibility of a second wave of corona scare and its curve flattening soon. And the country will experience normal economic activities soon. Let us wish to get the anti-corona vaccine by late 2020 or early 2021. Hope tells a flattering tale in my ears that the year 2021 will be really a good one for the Indian economy.