What Economists Draw Out of This Lockdown?

Updated on: 3 July 2020 11:50 pm

Eminent economists world over are busy charting out a roadmap as to how to come out of this unprecedented crisis but seeing the severity the suggestions and the roadmap devised by each one of them is different. The country is staring at a possibility of lockdown extension that comes up with huge economic loss. But what are the view points of various economists about this ongoing crisis?

1. Raghuram Rajan

Rajan, former governor of RBI, has said from various channels that this is going to be a “greatest emergency” India is facing right now. Rajan posted it on Linkedin on April 5. He said, “That even before coronavirus pandemic India’s economic outlook had been weaking steadily and the social politics environment was deteriorating.” He also said that India reforms only in crisis. Rajan also put enough emphasis on the need for a planned phase-wise return from the lockdown. He also suggested a raft of measures like direct benefit transfer.

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2. Shamika Ravi

Ravi, a renowned economist and a former member of Prime Minister’s Economic Advisory Council, said, “Firstly, the economic damage due to this lockdown will be very severe. Clearly, we will be in a recession. But we will have to see whether that recession is long drawn or not. Also, to prevent it from becoming a depression, we will require the government to start pumping in a lot more money and for the RBI to have accommodating outlook.”

“Right now, 1.4 billion people are under lockdown. That’s mammoth. It's a very large fraction of the global population. But moving forward, the question is should the whole country remain under further lockdown? I don't think that is the right way to go. But then the question is in which areas would you lift restrictions? What is the age group that should be allowed to step outside? Why should the districts which are completely unaffected remain under lockdown? Maybe, we will have to identify those districts where we should focus our efforts on containment and treatment, management of disease and the rest of the country should be able to go about its normal life.”

3. Gita Gopinath

IMF chief economist Gita Gopinath said that this is going to be a great lockdown and will be very different from global financial crisis. She suggested that every economy should remain alert as stimulus package will push up the fiscal deficit and debt to GDP ratio and thus the need of the hour is to have proactive fiscal policy. She also said that if people get back to work more quickly and the policies that have been put in place are effective then we can think about a rebound.