What approach should we adopt to stimulate the economy after Covid 19?

Hi,

I am starting this series of questions - one question everyday to address questions from current affairs to bring some accountability in our preparation. Please suggest points!

Neyawn , Tetsuko and 2 others like this
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Corona can possibly be a big push to come over the inertia of India. Digitalisation , globalisation, governance . Even queue system


lol this is a research topic😀

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There are two.major streams of thought woth regard to this.

The neo- liberals call for stimulating the economy by increasing money flow to job creators and businesses, and at the same time cash transfer to the migrant workers directly. They propose, relaxing labor laws like UP has done, providing sovereign guarantee to companies that can be avoided from going bankrupt , raising capital through treasury bills, perpetual bonds, etc.

The challenge here is that spending money by the government is not going to help with lockdown induced supply side constraints. It is not that there is no demand - which the government would like stimulate, but that demand cannot be met because of supply chain being interrupted.


There is also an argument given by Marxist economist like Parbhat Patnaik . They suggest government going for food provisioning, village panchayat based enterprises like early China, not relaxing labour laws and oppose policies that give money to business owners and not workers. They are calling for re focusing on MNREGS and coming up with Urban Employment Guaranttee scheme to stimulate economy in urban areas.


These two approaches are poles apart, and we will have to see what the government actually does.


Given the PM's speech on self reliance it is unlikely that he supports schemes that make people dependent on government doles. 

Dr_Mohamed_Riswin, SniperElite and 2 others like this
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Neyawn said

There are two.major streams of thought woth regard to this.

The neo- liberals call for stimulating the economy by increasing money flow to job creators and businesses, and at the same time cash transfer to the migrant workers directly. They propose, relaxing labor laws like UP has done, providing sovereign guarantee to companies that can be avoided from going bankrupt , raising capital through treasury bills, perpetual bonds, etc.

The challenge here is that spending money by the government is not going to help with lockdown induced supply side constraints. It is not that there is no demand - which the government would like stimulate, but that demand cannot be met because of supply chain being interrupted.


There is also an argument given by Marxist economist like Parbhat Patnaik . They suggest government going for food provisioning, village panchayat based enterprises like early China, not relaxing labour laws and oppose policies that give money to business owners and not workers. They are calling for re focusing on MNREGS and coming up with Urban Employment Guaranttee scheme to stimulate economy in urban areas.


These two approaches are poles apart, and we will have to see what the government actually does.


Given the PM's speech on self reliance it is unlikely that he supports schemes that make people dependent on government doles. 

Given that those are the two major strands of thoughts on ways to overcome economic stagnancy, I think till now the government has chose the middle path:-


1. Neo Liberal aspect- Focussing on liquidity via promoting credit to MSME and other such measures 

2. Marxist approach- Focussing on MGNREGS by increasing per day wage and increasing the intake of workers. Also food provisioning announcement made yesterday. 


While the final picture will be clear by week end when all tranches will be announced by the Honourable Finance Minister, I think the most holistic approach will be what was suggested by C.Rangarajan recently in an article on The Hindu. He suggested three approaches the government should take 

1. Increase potable income of household to ensure demand doesn’t slide (amidst decline in saving and austerity mindset amongst people)

2. Relief to poor and MSME - to prevent crash of that sector and destitution of the vulnerable 

3. Bailouts to industry- To create a situation where industries ensure supply chain remedies and kickstart economic activity.


Easier said than done due to fiscal constraints but I’m optimistic.

Neyawn, Naadan_Parinda and 5 others like this
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What are your views on non operationalisation of IBC for six months ?


What are your views on funding these things from ?


That is, where will the money come from?

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Corona can possibly be a big push to come over the inertia of India. Digitalisation , globalisation, governance . Even queue system


lol this is a research topic😀

The only topic in these times! Everybody is an economist these days. So let us also do our bit :)

524 views

Neyawn said

What are your views on non operationalisation of IBC for six months ?


What are your views on funding these things from ?


That is, where will the money come from?

@Neyawn  (Sir) How can the government raise money in such difficult times?

523 views
@goldberry corona bond s a soln u see like 1st wrld war bond especially when Warren Buffet says he s sitting with pile up of investment!!Rest increase wrk hrs and declare financial emergency at least unofficially.As Raghu Baba said RBI shuld take on sm gurantees for bank balance sheet while one time controlled deficit financing can wrk.Monetise unused govt lands,restructure admin for effficiency(bpr,accounting reforms ripe time),recharge it with commitment at least via role models,utilise opp 2 attract firms amidst China frenzy milieu.Put moratorium on interst payments after dialogue.Btw u shuld also contribute rather merely putting fwd ques no??


524 views

Neyawn said

What are your views on non operationalisation of IBC for six months ?


What are your views on funding these things from ?


That is, where will the money come from?

My personal non expertise view is as follows :-

1. Non operationalisation of IBC for 6months 

A. Could be beneficial for those enterprise who have become stressed and/or insolvent due to Covid. Will provide them additional time to get over the stress via extended time/liquidity to keep afloat 

B. But if it is being non operational, it must be supplemented with identification and quick hand holding measures for these enterprises (or majority of them). If this doesn’t happen, more likely many of these enterprises will see their valuation deplete over 6months. So in effect the non operationalisation may backfire on them and stakeholders. 


2. How the government may finance measures (major ways)

A. The additional 4lakh crore market borrowing will help 

B. The aid/loan coming in from World Bank, AIIB, New Development Bank could help with some expenditure 

C. Printing new money as last resort - in a contracting economy, printing money shouldn’t have immediate inflationary effect

Naadan_Parinda, HueyFreeman
522 views

Agog said

@goldberry corona bond s a soln u see like 1st wrld war bond especially when Warren Buffet says he s sitting with pile up of investment!!Rest increase wrk hrs and declare financial emergency at least unofficially.As Raghu Baba said RBI shuld take on sm gurantees for bank balance sheet while one time controlled deficit financing can wrk.Monetise unused govt lands,restructure admin for effficiency(bpr,accounting reforms ripe time),recharge it with commitment at least via role models,utilise opp 2 attract firms amidst China frenzy milieu.Put moratorium on interst payments after dialogue.Btw u shuld also contribute rather merely putting fwd ques no??


I am also contributing in whatever way i can. I am seeing people create stupid threads which is why I am trying to create useful threads.

496 views

Agog said

@goldberry corona bond s a soln u see like 1st wrld war bond especially when Warren Buffet says he s sitting with pile up of investment!!Rest increase wrk hrs and declare financial emergency at least unofficially.As Raghu Baba said RBI shuld take on sm gurantees for bank balance sheet while one time controlled deficit financing can wrk.Monetise unused govt lands,restructure admin for effficiency(bpr,accounting reforms ripe time),recharge it with commitment at least via role models,utilise opp 2 attract firms amidst China frenzy milieu.Put moratorium on interst payments after dialogue.Btw u shuld also contribute rather merely putting fwd ques no??


I am also contributing in whatever way i can. I am seeing people create stupid threads which is why I am trying to create useful threads.

How can you say increase working hours as a solution? We are already having undeclared financial emmergency!

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@goldberry Desperate times warrants unconventional response eg conscription during Indo China war and even parliamentary panel and recently Army favouring it ,we have 2 fire all salvos of our armour ,min must debate over it thts wht advisory council s 4!!Alrdy clamours 4 the same and pvt sector il take lead!


497 views

Neyawn said

There are two.major streams of thought woth regard to this.

The neo- liberals call for stimulating the economy by increasing money flow to job creators and businesses, and at the same time cash transfer to the migrant workers directly. They propose, relaxing labor laws like UP has done, providing sovereign guarantee to companies that can be avoided from going bankrupt , raising capital through treasury bills, perpetual bonds, etc.

The challenge here is that spending money by the government is not going to help with lockdown induced supply side constraints. It is not that there is no demand - which the government would like stimulate, but that demand cannot be met because of supply chain being interrupted.


There is also an argument given by Marxist economist like Parbhat Patnaik . They suggest government going for food provisioning, village panchayat based enterprises like early China, not relaxing labour laws and oppose policies that give money to business owners and not workers. They are calling for re focusing on MNREGS and coming up with Urban Employment Guaranttee scheme to stimulate economy in urban areas.


These two approaches are poles apart, and we will have to see what the government actually does.


Given the PM's speech on self reliance it is unlikely that he supports schemes that make people dependent on government doles. 

There is a "Middle Path". The concept of Trusteeship, propounded by Gandhiji. Sometimes I wonder, how well he knew about Indian society.

I couldn't summarise this article (due to lack of time), apologies for that. But attaching images.


Neyawn, HueyFreeman and 3 others like this
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@Naadan_Parinda Gandhi’s philosophy is so broad that there is no walk of life which cannot be understood from Gandhi”s perspective.

Gandhi. And Marx. Which is why when you write an Essay, even if the topic is AI or cyberspace to something as abstract as happiness, you can always analyse the issue from Gandhi and Marx perspective.

Naadan_Parinda, HueyFreeman and 1 others like this
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Neyawn said

@Naadan_Parinda Gandhi’s philosophy is so broad that there is no walk of life which cannot be understood from Gandhi”s perspective.

Gandhi. And Marx. Which is why when you write an Essay, even if the topic is AI or cyberspace to something as abstract as happiness, you can always analyse the issue from Gandhi and Marx perspective.

Any good source for non-political science students to learn about Marxist philosophy? 

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Any good source for non-political science students to learn about Marxist philosophy? 

I could tell you that. But that will require a leisure time. I am going to feel massively guilty for pushing you in this direction.

So let me do something that is actually useful to you.

On reviving the economy, take a look at Prabhat Patnaik and Harsh Mander's article. You will see what a leftist approach to handling the crisis is.

Here is the link ( All newspaper remove old links, so I am sharing only the articles I have )

https://www.evernote.com/l/AXSfIWilvMlMapleInf9cqVb4eBwI7jSut0

https://www.evernote.com/l/AXTvK_lURkRCe7N_YvjCJyo2sjdvXbIVP_8


Also, to see what a neo-liberal thinks on the issue, you can read Arvind Subhramaniyam's approach

https://www.evernote.com/l/AXQWP_qPTJ1O8pZ7uNLVUCFfMrK385uVMjU

This isnt the best article, but I am unable to locate the mains article, that could give you a good glimpse. The article has been removed from the website, and I think I forgot to save it in my Database.


Do get back to me here, if you are able to decipher a "trend" in suggestions offered by the two sides!

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Quick question : Where does Gandhi stand on the political spectrum - left or right ? :)
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Also, You can read somewhat leftist approach to vaccine development here

https://www.evernote.com/l/AXQYsPVC51BKTKBE3r5FaAC4im_cMC_V3zM

Stiglitz is again critical of free markets, and a known Georgist. 

PSY, Dr_Mohamed_Riswin
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Do like the posts, not to support me in particular, but to support this kind of discussion on the forum.
PSY,
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