Stiff Challenges before Government Post COVID Lockdowns : Prof Dr. J.D. Agarwal, IIF
However, speaking on challenges before government, Prof. Agarwal said that firstly the challenge is to fight against COVID 19 after relaxation in lockdown 4.0, number of cases increased more than earlier lockdowns as migrant laborers moving back to their hometowns without maintaining social distancing, making it very difficult to contain COVID 19. And reviving rural economy is the biggest challenge before the policy makers. for which announcements made by Finance Minister may help to a great extent.
Secondly another challenge before the government is to fight against hunger. Poverty level is higher in India due to lockdown, and hunger has grown much bigger. Thirdly government need to maintain fiscal balance which is supposed to be around 3.5% but lockdown has disturbed fiscal balance and put a lot of pressure on the government to maintain fiscal balance. It may jump to 5 to 6 percent said Dr. Agarwal.
Fourthly, the challenge is also to financing the financial package. The government might resort to fiscal deficit, monetization, cutting down its own expenditure including not initiating some of the projects, borrowing by issuing bonds and loans or grants from international agencies like ADB or world Bank to deal with abnormal situation. Fifthly, the challenge is: How to get the Karmayogis – the shramik in the country back on the work in the post COVID 19 Pandemic. Sixthly, rising NPA is another serious policy dilemma before banks and financial institutions as cash inflows have suffered badly due to lockdowns.
The lock downs may lead to Population explosion and government should take care of that as four lockdowns could actually lead to a population explosion by early 2021 said Prof. Agarwal.
One area which has escaped attention of the Finance Minister in her announcement is education sector emphasized Prof. Agarwal. Education institutions setup by charitable trust and societies need to be bailed out or financial relief package for education sector as education institutions are finding it difficult to pay to faculty to be kept on the basis of sanctioned strength rather than actual strength when the revenue is almost zero.
Prof. Agarwal cautioned that charity for long time would become right of the people when right is not given to the people they become lazy and become burden on the other population.
Indian Institute of Finance