ET2020 ⁽⁷⁾

Economic Times, March 31 2020 Corona epidemic, which originated in China in December 2019, has now reached 175 out of a total of 195 countries in the world. No past pandemic has spread this widely and this fast. And we are far from seeing the proverbial light at the end of the tunnel. Until a definite cure and vaccine against the virus are found, the threat will loom. India too is in the midst of this calamity. An extra-ordinary challenge requires an extra-ordinary response. Thankfully, the Prime Minister has acted decisively and confidently. India is now on a 21-day lockdown. Short of this action, risks for India were huge. The Prime Minister couldn't have been more right when he said that without the 21-day lockdown, the nation risked being setback by 21 years. To be sure, the lockdown asymmetrically disadvantages those living hand to mouth. One can argue that even the poor can survive for a week with the help of their better off neighbors, fellow villagers and those for whom they work. But a period of three weeks without…

February 3, 2020 There is much in Budget 2020-21 that I like. But it also has a serious shortcoming in one area requiring urgent course correction. I discuss below three specific provisions in the budget that would serve India well before turning to the one that greatly worries me. First, despite calls from many quarters to go on a spending spree, the Finance Minister has chosen to stay course on fiscal discipline. The level of public sector borrowing, inclusive of deficits in the budgets of central and state governments plus off budget borrowing, is already estimated to be in excess of 9% of the GDP. Therefore, pushing the central government fiscal deficit to 4.5% as desired by some analysts would have starved a private sector already short of investment funds yet more. At a time when the economy is struggling to accelerate growth, crowding out of highly productive private-sector investment is not a winning strategy. Second, the government has initiated the reform of personal income tax system by offering to lower tax rates to those willing to forego nearly all…