A group of luminaries come together with their diverse voices to examine the pandemic’s economic and social impact
When one picks up the book, Beyond Covid’s Shadow, it is a bit of a disappointment as one realises that it’s not written by Sanjaya Baru but edited by him. Baru is well known as an erudite journalist who puts his fingers on the right spots. However, he makes up for his absence, or very limited presence (as he has an article in this volume), by getting some of the best-known luminaries to write essays on the subject. Hence, there is some compensation.
How does he choose the writers? It is a mélange of experts on all sides of the establishment, with the ubiquitous economists on the edge to give expression to different views. Baru has his say in his essay, where he openly says that the lockdown was draconian, as it affected people’s lives and the economy. There is a piece by Subramanian Swamy, which may not find too many supporters, as he advances his pet theories on keeping a fixed exchange rate of Rs 50 per dollar and the lending rate at 9%. There is some logic, albeit not convincing at all, especially when he says that we should print more notes to finance infrastructure and not bother about the fiscal deficit. Clearly, this kind of system does not work any longer.
The essays could get a bit repetitive, as the authors talk a lot about the movements of economic variables during the lockdown period. As they come independently from different experts, this is understandable, but the reader could get caught in a plethora of data points all pointing to the downslide. After a point, one can skip these tables and graphs. Also, it is generally accepted by most authors that the economy was already on the downslide before the pandemic and, hence, one has to look at addressing the long-standing issues and go beyond just the pandemic effect, which is just another shock. Arvind Virmani, for example, gives 12 solutions in different areas, including duty rates.
But some of the ideas emanating from some of the pieces stand out, which can be used by our policymakers. Bibek Debroy, for instance, talks of his preference for expenditure over tax cuts, as he believes that the multiplier effects are larger and more effective. He also speaks of monetisation of assets, which has already found utterance in the FY22 Budget. Such expenditures also help in creating jobs, which is very important. Haseeb Drabu has an interesting piece on federalism, which makes a lot of sense in the current context of the unlock process. We have been concentrating a lot on vertical federalism, which is what is guaranteed by the Constitution. However, what is more relevant is the lateral federalism concept, where states need to be talking to one another and cooperating to bring about the best solutions. If one looks at the way in which the unlock process worked, this idea will resonate, as the states had their own laws and tried to protect their interests even if it meant being at the cost of others.
Rama Bijapurkar has a pointed essay where she rightly points out that we need to distinguish between the small business, which makes the real India, and big business. Most of the accolades that we have achieved, even in terms of being one of the largest economies in the world, have been due to the latter and not the former. We need to concentrate on the former, as this is where there are jobs to be created and, for this, we need to make them strong.
Meghand Desai’s piece is quite provocative, as he shows how it is not just economists who get their forecasts wrong, but also scientists who are generally more precise with their models. His contention is that they were never able to get right the role of herd immunity or even the lockdown concept on the spread of the virus. While this was a shock which no one expected even this fraternity was not able to precisely say how the spread could be prevented or slowed down. Interestingly, he gives an idea to economists that whenever they build models to explain things, a factor that has to be considered is distance, as it affects the future of several industries. This is something which will surely get embedded in models in the future.
There are fairly comprehensive and optimistic scenarios given by Amitabh Kant and Rajiv Kumar, which could be taken as the official view, as they explain how the government had its policies in place, keeping the short-term requirements and medium-term reforms in mind. Therefore, there are refresher courses on what Aatmanirbhar stood for by the latter in an essay written with Ajit Pai. If one juxtaposes this with the views of Omkar Goswami, there is a contrasting picture obtained, as he feels that it would not be right to compare these policies with the package of 1991 and to do so would be hyperbole. He is sure that one cannot be optimistic of the future and uncertainty prevails more than hope.
Hence, this book makes very interesting reading, putting together diverse views. It may be hard to take a call on whether Covid was tackled the right way and if there is hope of a recovery soon. Everyone agrees that jobs, small enterprises (Nageswaran), decentralisation (Jagannathan), women empowerment (AV Jose), etc, are areas where more work needs to be done. There is also convergence on what has to be done in the future, though there is difference of opinion on whether we are on the right track and whether enough has been done to attain this objective.
Madan Sabnavis is chief economist, CARE Ratings
Book info: Beyond Covid’s Shadow: Mapping India’s Economic Resurgence
Edited by Sanjaya Baru
Pp 321, Rs 595