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This is an excellent video to understand what the government's economic response to Covid-19 has been and what it will be in the future
@sanjeevsanyal
@sanjeevsanyal
Around 15th Mar-20, what information did the government have?
1. Something very bad has happened in China (no concrete data on how many dead, how many more in danger)
2. Rich people are dying (mass graves) rich countries like Italy
1. Something very bad has happened in China (no concrete data on how many dead, how many more in danger)
2. Rich people are dying (mass graves) rich countries like Italy
GOI consulted experts.
Opinion was divided between
a) It is just a bad version of the flu to
b) 2 million people will be dead by Jul-20
Base Conclusion - No one has any clue how this will pan out.
GOI announced nation-wide lockdown - prepared the country for the worst case.
Opinion was divided between
a) It is just a bad version of the flu to
b) 2 million people will be dead by Jul-20
Base Conclusion - No one has any clue how this will pan out.
GOI announced nation-wide lockdown - prepared the country for the worst case.
Indian response -
85% of Indians got foodgrains and pulses
Loan moratorium announced - personal and corporate bankruptcies avoided
NBFC/HFC package (to avoid defaults and cascading damage to financial sector)
Loan Guarantee schemes
85% of Indians got foodgrains and pulses
Loan moratorium announced - personal and corporate bankruptcies avoided
NBFC/HFC package (to avoid defaults and cascading damage to financial sector)
Loan Guarantee schemes
Developed World Response -
(US, UK, Germany, EU, Japan etc)
Print money
Massive junk bond buying
Cash handouts to all (helicopter money)
Monetization of government debt
(US, UK, Germany, EU, Japan etc)
Print money
Massive junk bond buying
Cash handouts to all (helicopter money)
Monetization of government debt
What happened?
India - starvation was avoided
Bank defaults avoided, no cascading damage to financial sector like the GFC in 2008-09
Developed World
Equity markets went up
People saved most money they got as handouts
Velocity of money reduced.
China benefited bcoz of demand-back
India - starvation was avoided
Bank defaults avoided, no cascading damage to financial sector like the GFC in 2008-09
Developed World
Equity markets went up
People saved most money they got as handouts
Velocity of money reduced.
China benefited bcoz of demand-back
India conserved both fiscal and monetary space
Inflation is not a problem in India. Why?
1. We have not printed money (we can't)
2. There is not demand-driven inflation, CPI is high due to supply shocks bcoz of lockdown.
Inflation is not a problem in India. Why?
1. We have not printed money (we can't)
2. There is not demand-driven inflation, CPI is high due to supply shocks bcoz of lockdown.
Now, the only way or the Indian economy is to go UP.
Now that economy is going up, and lockdown is thing of the past @sanjeevsanyal says GOI will spend (massive amounts).
Now that economy is going up, and lockdown is thing of the past @sanjeevsanyal says GOI will spend (massive amounts).
What will we spend on?
Anything that creates 2nd order and 3rd order effects
Eg. Infrastructure, vehicle scrappage policy, real estate etc.
Also, reforms a top agenda - labour reform laws passed by Rajya Sabha today.
Anything that creates 2nd order and 3rd order effects
Eg. Infrastructure, vehicle scrappage policy, real estate etc.
Also, reforms a top agenda - labour reform laws passed by Rajya Sabha today.
What is the biggest policy priority for GOI right now?
Insert India into the global supply chains of the World
Happened with
Japan in 1950s, 1960s
Singapore, South Korea in 1970s, 1980s
ASEAN in 1980s
China in 1990s, 2000s
Vietnam in 2010s
Insert India into the global supply chains of the World
Happened with
Japan in 1950s, 1960s
Singapore, South Korea in 1970s, 1980s
ASEAN in 1980s
China in 1990s, 2000s
Vietnam in 2010s
Which sectors likely to pioneers? (my guess)
Make in India
Pharma-API (everyone knows this)
Chemicals
Defense manufacturing
Plastics and Misc manufacturing
Start-ups, IT
Make in India
Pharma-API (everyone knows this)
Chemicals
Defense manufacturing
Plastics and Misc manufacturing
Start-ups, IT
