Miscellaneous
Co-hosts Arvind Panagariya and Pravin Krishna discuss causes of pre-Coronavirus growth slowdown, what Coronavirus may bring by way of economic impact and possible responses. On pre-Corona slowdown, they identify four possible explanations: GST, demonetization, weak demand, and financial market disruption. They conclude that financial market disruption is the most important factor accounting for pre-Corona slowdown in growth. Their main recommendation is resistance on the part of the RBI to a return to the past practice of allowing restructured loans to be classified as standard assets. On Coronavirus-induced slowdown, at this stage, there is far too much uncertainty to predict how deep the impact will be. But even under a scenario in which India succeeds in containing the virus to clusters, the impact will be significant. They suggest cash transfers and increased provision of subsidized grain to the poor, especially those in urban areas. The government may also consider temporarily delaying tax collection and loan repayment.