'IMF's 1.9% Growth Prediction for India Ludicrous, Actual Figure Could Be Negative' I Karan Thapar
The Wire
2021-06-03
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In sharp and outspoken criticism of the International Monetary Fund, India’s former Chief Economic Advisor and former Chairman of Kotak Mahindra Bank, Shankar Acharya, has said the Fund’s claim India will grow by 1.9% this year is “ludicrous and irresponsible.” Professor Acharya said it’s “very difficult not to have negative growth.” He said growth “could be 3 or 4 percent negative.”
In a forty minute interview to Karan Thapar for The Wire, Professor Acharya said during the 4 weeks the lockdown has lasted as a total lockdown he believes around 40 or 50 percent of economic activity was happening. Now, with the relaxation starting today, a further 5 or 10 percent of economic activity could be added.
Professor Acharya was particularly concerned about the impact of the lockdown on 80 percent of India’s labour force who work in the unorganised sector. He believes “upwards of 100 million” people have already lost their jobs. He said the Centre for Monitoring the Indian Economy’s figure of 24 percent unemployment upto April 12 is ”massive and completely unprecedented”. He said India has “never had that kind of jump in unemployment in its recorded post-independence history.” He was also deeply concerned about the 6 percent fall in the labour participation rate. He said both the unemployment and participation rate lead him to believe “upwards of 100 million have lost their jobs”.
Professor Acharya said in terms of need there is a lot more the govt could do to alleviate the suffering of hundreds of millions who he said are “destitute” and “starving”. However, in terms of capacity there is very little the govt can do. If economic activity has fallen by 50 or 60 percent, its possible revenues have crashed by a similar amount and the fiscal deficit at the moment could already be over 15 or even 20 percent of GDP. In these circumstances further adding to the fiscal deficit is very difficult.
He said what the govt can do – and this is his advice – is “completely remove” the lockdown on May 3rd. The only 2 provisos he is prepared to accept is the need to observe social distancing and the need to ensure people over 60 do not go out or go out as little as possible. But on at least 3 occasions Prof Acharya said the lockdown must be completely removed by May 3rd.
When Prof Acharya was asked by The Wire whether he stood by what he had written in the Business Standard on 9th April that “there should be no extension of the current nation-side lockdown beyond April 14” he first said he “broadly” stood by it but when asked if the Prime Minister had made a mistake extending the lockdown he was reluctant to say yes. Instead, he pointed out that the total lockdown had only been extended by 5 days and what would prevail from April 20th to May 3rd was a relaxed lockdown.
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In a forty minute interview to Karan Thapar for The Wire, Professor Acharya said during the 4 weeks the lockdown has lasted as a total lockdown he believes around 40 or 50 percent of economic activity was happening. Now, with the relaxation starting today, a further 5 or 10 percent of economic activity could be added.
Professor Acharya was particularly concerned about the impact of the lockdown on 80 percent of India’s labour force who work in the unorganised sector. He believes “upwards of 100 million” people have already lost their jobs. He said the Centre for Monitoring the Indian Economy’s figure of 24 percent unemployment upto April 12 is ”massive and completely unprecedented”. He said India has “never had that kind of jump in unemployment in its recorded post-independence history.” He was also deeply concerned about the 6 percent fall in the labour participation rate. He said both the unemployment and participation rate lead him to believe “upwards of 100 million have lost their jobs”.
Professor Acharya said in terms of need there is a lot more the govt could do to alleviate the suffering of hundreds of millions who he said are “destitute” and “starving”. However, in terms of capacity there is very little the govt can do. If economic activity has fallen by 50 or 60 percent, its possible revenues have crashed by a similar amount and the fiscal deficit at the moment could already be over 15 or even 20 percent of GDP. In these circumstances further adding to the fiscal deficit is very difficult.
He said what the govt can do – and this is his advice – is “completely remove” the lockdown on May 3rd. The only 2 provisos he is prepared to accept is the need to observe social distancing and the need to ensure people over 60 do not go out or go out as little as possible. But on at least 3 occasions Prof Acharya said the lockdown must be completely removed by May 3rd.
When Prof Acharya was asked by The Wire whether he stood by what he had written in the Business Standard on 9th April that “there should be no extension of the current nation-side lockdown beyond April 14” he first said he “broadly” stood by it but when asked if the Prime Minister had made a mistake extending the lockdown he was reluctant to say yes. Instead, he pointed out that the total lockdown had only been extended by 5 days and what would prevail from April 20th to May 3rd was a relaxed lockdown.
Like our work? Click here to support The Wire: https://thewire.in/support
The founding premise of The Wire is this: if good journalism is to survive and thrive, it can only do so by being both editorially and financially independent. This means relying principally on contributions from readers and concerned citizens who have no interest other than to sustain a space for quality journalism. As a publication, The Wire will be firmly committed to the public interest and democratic values.
We publish in four different languages!
For English, visit www.thewire.in
for Hindi: http://thewirehindi.com/
for Urdu: http://thewireurdu.com
for Marathi: https://marathi.thewire.in
If you are a young writer or a creator, you can submit articles, essays, photos, poetry – anything that’s straight out of your imagination – to LiveWire, The Wire’s portal for the young, by the young. https://livewire.thewire.in/
You can also follow The Wire’s social media platforms and engage with us.
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https://twitter.com/thewirehindi
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