India’s principal economic advisor reveals what the post-COVID reforms could look like

• Economic advisor Sanjeev Sanyal believes that the government may announce medium-sized relief packages as the country enters a rebuilding phase after the lockdown.
  
• Sanyal said that these measures might come in the form of tax incentives that promote manufacturing in the country.
  
• Right now India is prioritizing public health over saving the economy with a nationwide lockdown. But with every passing day, the lockdown is weakening the health of the Indian economy.
  
• Sanyal said that while certain sectors such as international travel will remain restricted, parts of manufacturing and services sector along with the movement of goods domestic and globally will be normalized to a large extent by May 4.

India might have delayed the dreaded Stage 3 of the Coronavirus with an ‘early’ lockdown. But every day that India remains closed, its economy is turning weaker, said Sanjeev Sanyal, India’s principal economic advisor.

Even after lockdown ends, a lot has already changed, and a post Covid-19 world would be structurally different, he told in a conference call with Kotak securities.


“The government is prepared for the long haul to deal with the Covid-19 impact and may announce medium-sized relief packages as India enters the rebuilding phase of the economy post-COVID lockdown,” Sanyal said.

Indian relief packages will be designed to benefit from the opportunities that may arise amidst a new global order. Sanyal believes that the global order will be reset at many levels — social, economic, geopolitical, supply chain and technological.

India’s post-lockdown agenda is to unleash its growth potential

After ensuring the health of people, Indian government will work on improving the health of the economy.The country is facing troubles both at the supply and demand ends due to affected supply chains, and labour constraints.

The number of affected sectors include hospitality, aviation, surface transport, real estate and manufacturing. It has affected the savings of poor and middle class people and SMEs could suffer the most. “The full scale of economic impact will only be visible after a few months, a gradual approach is warranted,” said the Kotak Securities report.

Citing the example of Japan, Germany and China, which undertook large-scale reforms following geopolitical outcomes, Sanyal said the stage is set for India to unleash its growth potential. According to him, the government might offer tax incentives to promote manufacturing.

As per the current directives from the government, large parts of the economy may open up from May 4, while hotspots may remain closed. Sanyal however still believes that while certain sectors such as international travel will remain restricted, manufacturing and services along with the movement of goods, will normalize to a great extent.