As the country’s economy is crippling, there is a need to think of ways to get a robust economic recovery in the post-lockdown period. Examine (200 Words)
Refer - Financial Express
Enrich the answer from other sources, if the question demands.
IAS Parliament 5 years
KEY POINTS
· India is under lockdown, and economic activity, other than the supply of essential goods and services, is suspended.
· Direct cash transfer of Rs 500 to women and free food grains are being given to mitigate distress and hunger. There is a growing consensus that this support needs to be enhanced as the poor need to buy other essentials other than foodgrain, too.
Ways to get the economy back
· The construction sector has a large multiplier effect and is labour-intensive. So, it is a natural choice. There are a large number of incomplete housing projects with developers in difficulty/bankruptcy.
· A simple but bold approach could work immediately; a takeover of all the incomplete projects from the developers, and getting the banks to immediately provide financing for completion at current costs with a government guarantee, could work.
· Preparatory work for takeover, tying up finances and settling contractual terms with the construction agencies can be done now. This would not need budgetary outflows.
· The automobile sector also has a large multiplier effect and has been experiencing a downturn. The lockdown has dramatically shown how clean the air has become.
· BS-VI fuel and vehicles are now available. But, air quality will reach European levels only after about 15 years, when all the BS-IV and earlier vintage vehicles go off the road in a business as usual scenario.
· A 50% reduction in the GST rate for all BS-I, II, III and IV commercial vehicles, which get traded in for scrapping at designated facilities, would create immediate additional demand.
· Most big infrastructure projects need 12-18 months to get going, and therefore, do not merit inclusion. Projects which can be funded by financial institutions are more attractive as they do not need budgetary resources.
· The upgradation of the rural distribution infrastructure may be financed through long-term subsidised loans with a moratorium of two years for debt repayment. This would give time for the financial turnaround of the discoms that the power ministry is driving.
