CEA Subramanian justifies India's 'calibrated' fiscal response to pandemic

Responding to the criticism that the government has been stingy with its fiscal response to COVID-19 pandemic and the resultant lockdown, Chief Economic Advisor K Subramanian said India's policy response was mature and far-sighted.

The chief economic advisor was addressing the media after Economic Survey 2020-21 was tabled in Parliament by Finance Minister Nirmala Sitharaman.

"We focused on saving life and livelihood, took short-term pain for long-term gain, recognised that while GDP will recover... lost human lives cannot be brought back. This was the humane principle that guided India's policy response," he said.

Subramanian also pointed out that India is the only country to announce structural policy reforms at the height of the pandemic.

The Economic Survey listed out the key structural reforms in agriculture markets and labour laws and change in definition of MSMEs carried out by the government. These reforms, it said, provide unparalleled opportunity to grow and prosper, and thereby contribute to job creation in primary and secondary sectors.

On demand side measures, the CEA said India's response was very different from other countries.  "They were more calibrated recognising the simple idea that pushing the accelerator works only when the brakes are removed," said the CEA.

The Survey said that public investment programme centred around the National Infrastructure Pipeline is likely to accelerate demand push and further the economic recovery.

He further said that the V-shaped economic recovery without a second wave of coronavirus infections makes India a sui generis case in mature policy-making.

According to the CEA, the mega vaccination campaign launched by the country against the COVID-19 pandemic will also help in economic recovery, especially in services sector.

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