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Arvind Panagariya echoes CEA's views on stimulus, says private sector has to shape up

Updated : August 22, 2019 09:08 PM IST

After chief economic adviser K V Subramanian said any such step will be a "moral hazard" and an "anathema" to the market economy, Arvind Panagariya, former vice-chairman of the NITI Aayog, on Thursday said that private sector has to shape up and cannot keep asking for a bailout.

Also read: “Moral hazard… anathema… socialising losses”, Chief Economic Advisor speaks out against fiscal stimulus

Panagariya, who is currently teaching economics at Columbia University, said corporate sector psychology of ‘help us out or economy will fail’ has to stop.

"I am personally very nervous for the government borrowing as what will be left for the private sector. Private investment has to take off, that is where more productive investments happen," Panagariya said to CNBC-TV18.

He said, "If you look at what the sales decline have been, at least going by what Rajiv Bajaj recently said, the decline at the retail level is about 5-7 percent and that seems to suggest to me that it is a cyclical downturn. We have seen this before in the auto industry. Maybe this one is a little bit more severe as some of the cost increases coincided with this cyclical decline in sales. On the whole, I personally see that this is an opportunity to get the auto industry to shape up."
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