India GDP projections by World Bank, IMF too optimistic: Ex-CEA Subramanian
NEW DELHI: Former chief economic adviser Arvind Subramanian on Wednesday said the GDP numbers being projected by the World Bank and IMF for India are far "too optimistic" and the country would require additional expenditure of Rs 10 lakh crore to bring the coronavirus-hit economy back on track.
As per the World Bank's latest assessment, India is expected to grow 1.5 per cent to 2.8 per cent during the current fiscal due to the impact of the COVID-19 pandemic and consequent lockdown.
Similarly, the IMF on Tuesday projected a GDP growth of 1.9 per cent for India in 2020, as the global economy hits the worst recession since the Great Depression in the 1930s.
With these subdued projections, India is likely to record its worst growth performance since the 1991 liberalisation of the economy.
"The number given by the World Bank and IMF in terms of the changes are way too optimistic because even if we lose one month's output, we are talking about pretty negative rate of growth and that is what should determine how we respond," Subramanian said in a webinar organised by economic think-tank NCAER.
"We are going to experience a sharp collapse in output for one month. We have to spend 2 per cent on medical side which is slightly underestimated... For one month output loss even if we make up one third of output loss by social cushioning or propping up financial system, still it would be 3 per cent of GDP. So the number we came up with Rs 10 lakh crore (Centre and states combined) or 5 per cent of the GDP," he said.
Because the economy is going to slow down, revenue collection for this year would be much less than the last year, he said, adding the revenue loss would be 1.5 per cent of the GDP.
Subramanian recommended five ways of financing additional expenditure over a period of one year, including cutting expenditure and borrowing directly from the RBI or monetizing debt.
He said Rs 1-1.5 lakh crore could be mobilised by cutting expenditure, while another Rs 1-1.5 lakh crore could be raised from multilateral institutions and NRIs.
他说，可以通过削减开支筹集1- 15万亿卢比，从多边机构和海外印度裔筹集1- 1.5万亿卢比。
RBI could print about Rs 1.5-2 lakh crore and borrowing through issuance of bonds could be in the range of Rs 4-5 lakh crore, he said.
他说，印度央行可以印钞1.5 - 2万亿卢比，通过发行债券借4- 5万亿卢比。
He also pitched for setting up a 'Solidarity Fund' where the 'haves' will pool in money for supporting the 'have-nots'. This could garner about Rs 1 lakh crore.
"This contribution can take the form of taxes or elimination of middle-class subsidies identified in the Economic Survey of 2016. The wealthy could contribute via a wealth tax with thresholds set by property values say above Rs 5 crore," he said.
Salaried employees in the public and private sectors could contribute via a small, progressive tax on salaries and pensions, he said, adding middle class subsidies that could be eliminated include interest and tax deductions for small savers, favourable taxation of gold and other luxuries.
Wealth taxes and elimination of subsidies for the rich should in any event be part of the long-run reform agenda to reduce growing inequality, he said.
He also said that the government should relax the borrowing norms for the states as this is an extraordinary situation which calls for extraordinary responses.
译文来源：三泰虎 http://www.santaihu.com/49755.html 译者：Jessica.Wu
Forget the words of economists such as R�ٻ���Ʊ��ַaghuram Rajan, Arvind Subramanian, Amartya Sens. In order to make India's economy more productive and competitive India needs excellent leader like Trump and first grade staff. India got third rating leadership along with garbage staffs.
Nageswara Rao S
Who asked for his opinions why these guys cannot keep quite and live in US happily??? We do not need you AS and RR
One can expect worse from the govt in the near term and be prepared. This BJP govt of Modi have created a mess and instead of trying to solve, they keep playing ping-pong with ordinary citizens. Aache Din for all has come.. the Modi version.
I'm reminded , in this context, a tweet by a respected columnist with words to the extent : ' Whenever there is strife in India, four chefs rush to the media and T.V. Studios. They are : Raghuram Rajan, Arvind Subramanian, Amartya Sen and Arundhati Roy'. And yet, our Macaulay media will publish their maudlin statements. That is the tragedy.
This is a recipe for Butchering the Senior citizens and retirees. While AS is right about the economy being in dire straits, its so, because of mismanagement by an incompetent govt. Why tax the already heavily taxed middle class?
This guy has changed is colors after going to US.. a chameleon... ignore him..
The salaried n pensioner class have already contributed to the PM's /CM's relief fund.Some prominent business houses have also contributed enough.But there r other business class who neither disclose their true income nor pay due tax.These people should be identified n milked.
Govt need to cut salaries by 25% central and state this itself will generate 4.5 lacs needed to pay poor and marginals
Glad he has not said India will reach 5 tillion this year.
yeah ! why not ! bucher the salaried class as it's easiest to know how much we earn out of the 14 hour daily slog. we are the only honest tax payers. you don't have a clue how much businesses are earning and hiding. it has become a norm that interests of salaried class are always last in line.
always negative thought
Thanks that he did not speak only -ve like earlier occassions. Best drive needed is buy Indian product, eat only Indian produce, dream India. I would urge, let Automobile renain slow for few years, let us not buy LED / Smart TV for couple of years other than made in India and�ٻ���Ʊ���� Govt must block 5G for couple of years. In this process, we shall buy moreand moreIndian product. All Indian business who opened mfg unit in Chn are requested U-Turn.
P M Madhyastha
Typical beuracratic way of increase tax on middle class, squeeze and bring them to poor class. No big innovation
Looking into post Coronavirus India's economy will remain sluggish. The projected economy will be disappointing.
Fanciful, as only economists can!...raising money thru market borrowings or voluntary contributions by the haves-when virtually everyone is (supposedly) cash-crunched, who will subscribe to the bonds? or cough up donations? Printing money is the only option because it does not depend on anybody's munificence. We should worry about inflation later
Expecting fekendra to revive dying economy in a matter of months is 'too' optimistic too. Indian economy was already in ICU even before virus, now with virus it's literally negative.
IMF and WHO have become redundant in today's context
what a crappy article. get economy into deeper depression through wealth tax and squeezing the already battered middle class.Focus should be on pump priming the economy through more investment and spend in infrastructure, healthcare. Govt should rather bring down tax rates and incetivize consumption. by giving such negative signals as recommended by this author, people will withdraw into their shell even further and economic recovery will be delayed.
India has been in a bad shape for last 3 to 4 years because of pathetic governance by Modi and BJP. Now we are totally in a mess. Expecting the current BJP government to revive economy is living a fool's dream.