The world has taken a huge blow as it battles the COVID-19 pandemic and economists suggest that India's FY21 gross domestic product (GDP) growth could fall to as low as 2.5 percent.
Chairman at Enam Securities Vallabh Bhanshali, former economic affairs secretary SC Garg and Arnab Das of Invesco shared their views on what economic policies are needed when the lockdown ends. They discussed the topics such as the help banks, non-banking financial companies (NBFCs) and manufacturing industries would require and the global scenario in FY21.
Here's what the trio had to say:
“These are extraordinary times. We have been going over the last four-five years through extraordinary reforms with regards to business processes, the way we look at ourselves and set our priorities. In that process, COVID-19 could not have come at a worst time. Yet, I feel when I look at some of the valuations in the market and how efficiency, governance, etc. are being valued and how companies are able to grow, I think there is some glimmer of hope. I think COVID-19 is resetting the world and when the world resets, and you have a lot of the reform already out of the way, we can begin anew,” said Bhanshali.
Speaking about Indian enterprises to come back in a big way, he added, “In a pandemic, there are a lot of unfortunate losses – losses of lives and financial losses, but you have a kind of slate just as you see clean skies today. Enterprises cannot be held back; India is full of enterprises and those enterprises will come back roaring. The Railways is making ventilators, a company in Rajkot is making a ventilator for Rs 1 lakh – from nowhere these things are happening.
"I think therefore that spirit, the whole enterprise engine, I think it is going to come back gushing big time. So, I cannot see the granularity of it, but I definitely see it as a wave happening and that India will come out of it just as I expect the world to come out of it.”
Next Garg spoke of timing of reforms. He stressed, “This is not the time for a reform. Reforms are advisable and a lot of that would be needed, but first we need to deal with the epidemic, the crisis, which has come on account of the epidemic. The economy has been locked down, that is what is required to be handled first and along with that we will need further reforms.”
When asked if the lockdown needs to be staggered in terms of its removal, Garg replied, “The lockdown – we are not fully aware and conscious of the cost of it. You have said, people are saying that the economy will lose or will grow at a less rate of about 2-3 percent, I see it very differently. If currently our 60-70 percent of the economy is not functioning and we produce about 8-9 percent of GDP in a month, I suspect that in the month of April – first 15 days – we would have lost 3-4 percent of the GDP already.
"If this continues as it is then we will lose that pace and therefore the decision regarding phasing in of the economy after April 14 must be considered taking this into account. On one side you have the risk of COVID-19 and this is a real risk but at the same time, you have to also manage to put the economy back on track. That would require a judgement to be applied and balancing of the risk as well as the advantage of the opening of the economy.”
Lastly, Arnab Das said, “It is going to take time for the world economy to recover its poise. I suppose what is going to happen is a series of gradual sequence of removals of these lockdowns because different countries has entered into the pandemic and into the lockdown at different times at different intensities and rates.
"Also there is very important risk of a second wave and you see the emergence of a potential second wave in Japan, some indications in that direction in China itself. So you see some lockdown starting to come back in in some places. So I think it is going to be quite complicated exiting from these lockdowns. It is going to be a much more gradual and sequenced kind of emergence from the lockdowns.”