“Why will India’s Economy bounce back soon?”

Sequence of Presentation

1.     Corona and its impact on India’s Economy

2.     Govt.’s initiatives so far, to fight Corona

3.     Post Corona, Challenges before India’s economy,

4.     Five major financial challenges before the Central Govt.

5.     What is Deficit Financing? And what are its perils?

6.     How will the Economy "Bounce Back”?

7.     Fundamental approach for strengthening the Economy

8.     " ?? ??????? ??? ???? ???? ???? ?????”

9.     What the Govt. will or should do…….?

10.  Will, we be able to recover out of this situation and How?

11.  How much time to “Bounce Back”?

12.  What the MSMEs should to fight the impact of Lockdown?

13.  What are the action points for everyone?

14.  How to fight effects of Corona in your Business & Profession?

15.  How to benefit from Lockdown personally?

Corona and its impact on India’s Economy

1.     Major setback to the economy

2.     Significant loss to Manufacturing Sector, 

3.     Relatively lesser damage to the Service Sector

4.     MSMEs hit quite hard

5.     Migrant labour worst affected

6.     Safe agriculture sector for the timely relaxation for the farmers

7.     Adverse economic impact on all sections of the society

8.     21+19 days of lock down, approximate cost to India is Rs. 18 lakh crore.

9.     Heavy load on already inadequate medical facilities & infrastructure

10.  Anxious post Corona job scenario for most, more so in the unorganized sector,

11.  Unprecedented uncertainty, locally and globally.

12.  Bigger challenge will the post Corona situation in the country.

GOI initiatives so far, to fight Corona

1.     Slew of initiatives to fight the Corona menace

2.     Janata Curfew to begin with

3.     3 Weeks’ of Lock down was now extended till 3rd May,

4.     Massive concerted efforts to build medical infrastructure in short time pan India

5.     Steps at all levels, to ensure minimum hardships to people during the Lockdown

6.     FM’s PM Gareeb Kalyan Yojana – Rs. 1.70 lakh Crores package.

7.     FM’s easing of compliance burden – good psychological support

8.     RBI’s announcements for easing of WC pressures on Industry as well as individuals

9.     Innumerable initiatives by all the State Govts to fight against Corona.

10.  Continuous communication by the Prime Minister with the people.

11.  2nd Package by RBI on 17th April, Rs. 50K Crores to DFIs and reduction of 0.25% in R-Repo

12.  A lot more financial balancing will need to be done by the Govt now and post Corona.

Post Corona - Challenges before India’s economy

1.     Non-essential manufacturing stand still

2.     Inactive manpower for an unprecedentedly long period

3.     Paucity of goods across the country, due to non-production

4.     Inertia & fatigue for people from Lockdown of Six weeks

5.     Eroded purchasing power in the hands of people, may become even worse

6.     Likely no. of casualty due to Corona?

7.     No Govt has ever faced such difficult challenge in the past

8.     How to bring back the economy on track after a lockdown of 40 days

9.     What approach to adopt for recovery?

10.  How many days should it take the economy to bounce back?

Five major Financial Challenges before the Govt.

1.     Massive increase in Unplanned Expenditures in fight against Corona

2.     Stoppage of revenue generating enterprises of Govt as well.

?       For example, Railways' revenue for 2018-19 is estimated at Rs 2,01,090 crore. 

3.     Lower Revenue Collections on account of Lockdown

4.     Demand for Stimulus Packages from all sections of the Society.

?       Govt has the responsibility as the lender of the last resort

5.     Necessity to increase Govt expenditures to boast the economy, post Corona scenario.

?       These challenges, will lead to substantial increase in the fiscal deficit for FY 2020-21.

?       This in turn will lead the Govt to resort to Deficit Financing.

?       What is Deficit Financing? Why and when should it be used? And what are its perils.

What is Deficit Financing? And what are its perils?

?       What are the advantages of Currency Printing

?       No interest obligation. No fixed repayment obligations. No collaterals required.

?       But the Govt should, based on its planning and Roadmap prepared, should be clear as to when it will be able to remove the amount of Currency Printing from its BS.

?       Is this dangerous?

?       Is borrowing in business dangerous? Yes, if the borrowed money is not being used for revenue generating assets.

?       Same is the case with Currency Printing also. If the money generated by Currency Printing is not used for creation of productive assets, rather is it being used in consumption, then there is a danger.

?       Is the money raised thru Currency Printing also needs to be paid back.

?       Yes in the same way as the Govt took it. When in need, it printed the currency. Now it does not need it, simply cancel so much of the currency and bring it to a naught, as before.

?       When Currency Printing will be dangerous?

?       When it is not resulting in higher GDP and there is more money in the system than the goods available. This will lead to excess Inflation in the country which is not a good sign.

?       Then there is a danger of Inflation, Interest Rates and exchange rates all going up, creating more trouble of the economy.

Fundamental approach for strengthening the Economy

1.     Now and post Corona, “Teamwork” and the proponents of Teamwork are on test.

2.     This unprecedented crisis can be defeated only with Teamwork and sacrifice by everyone, as per each one’s capacity.

3.     Follow the time-tested philosophy of – “??????????????”, and “????? ??? ??? ???? ???”

4.     Symbiotic living – One for all, and all for one, will need to be the guiding principle. And all means, all living beings.

5.     Mutual accommodation by all, at all levels. For survival and growth the country needs it. - Story of 2 goats

6.     “No one should ever sleep hungry”, has been everyone’s concern in this country and it would need to be so even now.

7.     This will lead to Revival, Survival and then thriving of the Economy.

" ?? ??????? ??? ???? ???? ?????????”

1.     Revival of economy is a joint responsibility of Govt., Industry and all other stakeholders including people in general.

2.     Government will have to give stimulus packages to the Industry, Businesses and the Agriculture Sectors.

3.     Industry and Businesses will have to ensure, maximum capacity utilisations, higher production and continued employment for all their employees, no retrenchments.

4.     Employees will have to ensure maximum productivity and production for their employers.

5.     Agri sector will contribute its might to the GDP of the country.

6.     Service Sector will need to ensure that the engines of growth are kept well-lubricated, all the time.

7.     People in general will have to consciously abstain from wasting resources.

8.     Industry then will need to reciprocate with higher tax payments to the Govt.

9.     And then at some stage, Govt will be able to cancel the currency financing

10.  Thus, post Corona crisis, India is going to emerge much more stronger and enlightened, with the experience and lessons of Corona Virus behind it.

What the Govt. will or should do…….?

1.     Do everything possible to keep the wheels of economy rolling, despite slowdown and lockdown.

2.     Come out with all kinds of stimulus packages for all sections of society 1) Industry 2) Service Sector 3) Agriculture Sector, 4) Finance & Banking Sector and 5) finally all citizens in general.

3.     Stimulus packages will need to be given with obligations attached. Have concrete plans for creation of productive assets from all the expenditures leading to substantial increase in GDP.

4.     Appeal to the Industry in particular and people in general to contribute generously for the cause of fight against Corona, leading to substantial funds mobilisation.

5.     Divest non-productive assets / investments to Private sector and go for Deficit Financing for the remaining gap.

6.     Being a true leader Narendra Modi, will continue to stand like a rock, ensuring “??? ?? ?? ???? ??” for the countrymen.

7.     And keep leading the Country in the fight against Corona and bring it back out of the demon Corona’s jaws.

8.     Post Corona, continue to motivate and inspire the countrymen using his moral authority to contribute their might in taking the economy to a much higher level than where it was, before the menace of Corona.

Will, we be able to bounce back out of this situation & How? Yes, we will come out of this situation sooner than later because:

1. It’s only a temporary mass-closure of manufacturing facilities and not a mass destruction of the facilities.
2. It’s not an earthquake or Tsunami like situation, where the whole infrastructure had to be rebuilt from the scratch.
3. Maximum loss to the economy equals to the stoppage of economic activity during the lockdown plus the time taken in recovery
4. Output in the Agri sector is expected to be 20% higher this time. Relaxation in lockdown will help it further.
5. IMD has indicated normal monsoon this year
6. Dedicated and committed visionary leadership at the helms, leading from the front.
7. Forget the GDP growth rate. These are only figures that too historical, have a limited use.
8. Economy has survived the worst in the past and this too shall pass.
9. A common belief, “an experience that does not kill me, makes me stronger”, silver lining behind dark cloud.
10. The resilience power of India and the Indians is unmatched in the world.
11. Conscious and awakened citizens, will make it happen by all means.

How much time to "Bounce Back”?

1. It will depend on, the degree of commitment and dedication we exhibit as a “Team”, and give our own ????? in this ??????? of bringing the economy back on the track.
2. In my view, maximum 2 to 3 weeks, from the time the Corona is defeated and LockDown is fully lifted.