New Delhi, August 8
As India’s financial progress begins to choose up, the nation goes to want maybe ‘a little bit of stimulus’ on the demand facet, famous economist and former Niti Aayog Vice-Chairman Arvind Panagariya mentioned on Saturday.
Panagariya additionally mentioned that imposing import licensing can be a violation of WTO norms that India has signed.
“Down the road, as the economy is continuing to open up, if we see that inventories are accumulating rapidly then that would be a clear sign that there is a demand deficiency problem. At that point, I think stimulus would be very useful,” he mentioned at CII’s India@75 digital occasion.
Panagariya identified that even with the present degree of intervention, India is observing debt-to-GDP ratio rising from 72 per cent to about 85 per cent at the very least by the top of the present 12 months.
“And we are going to need perhaps a little bit of stimulus on the demand side as the economy begins to pick up,” the eminent economist mentioned.
The authorities in May introduced practically Rs 21 lakh crore stimulus package deal to assist the nation tide over the financial disaster induced by the coronavirus and subsequent lockdowns.
Panagariya, a professor of economics at Columbia University, mentioned the nation’s economic system was in stress even earlier than COVID-19 hit it. India’s economic system grew at 4.2 per cent in 2019-20.
He opined that a big fiscal stimulus in India wouldn’t have produced end result because it has not given leads to the US or Europe.
“Large stimulus could help if the supply curve is positively sloped,” he argued.
Talking concerning the authorities’s ‘Aatmanirbhar’ programme, Panagariya mentioned Aatmanirbharata (self-reliance) doesn’t require that you simply received to supply the whole lot that you simply devour.
“Import substitution is not a good idea.. What worried me actually, is turn in the policies that has happened three years ago and trend has not reversed itself,” he mentioned.
Panagariya famous that he doesn’t suppose that the speak of ‘Aatmanirbharata’ accelerated the method of import substitution insurance policies.
“I don’t think since the talk of Aatmanirbharata, this has accelerated…I have heard some talk about import licensing, somebody has told me that import licensing has come back, I have not seen any reports of actual import licences having been imposed,” he mentioned.
“Of course that (import licensing) will be complete violation of WTO norms agreement that we have ourselves signed,” he added.
Panagariya additionally mentioned that he was extra nervous concerning the basic pattern of rising import tariffs in India.
He additionally famous that India is dealing with a strategic problem from China as a result of India’s economic system is way smaller than China’s. PTI