Fresh Stimulus Now Will Help Gain Momentum After Vaccine Invention!

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  • One of the most anticipated information on the vaccine front has galvanized the entire universe. Going by the reports emerging, the Indian citizens too should be feeling gung-ho as the eagerly awaited invention of vaccine appears all set to be made available in the next few weeks, most probably from January 2021 onwards. Battered economies around the world would surely feel relieved as the apprehensions surrounding the dreaded virus is still holding back people to resume economic activities full throttle like the earlier times.

PC: Gao Yun

  • Few of the vaccine candidates passing emergency user approvals from the governments concerned would amount to no less than a decisive step as the battle against COVID-19 hopefully reaches the endpoint from now on. Available economic indicators point to various sectors returning to pre-virus times on the back of fiscal initiatives already announced since the first lockdown. As the high-frequency economic indicators show clear signs of normalization, the Reserve Bank of India has also revised its economic forecast to announce that the ongoing quarter, October-December, will indeed record marginal growth.
  • However, the RBI’s growth forecast may not accurately reflect the complexities surrounding the GDP numbers simply because of the massive adverse impact on the typically informal sector dotting our country’s economic landscape. Clubbing trillions of economic transactions into one precise GDP number requires using numerous proxy indicators. Therein lies the challenge as discerning these indicators from the informal sector is well-nigh impossible, and to arrive at tangible GDP numbers poses serious questions.

PC: Shutterstock

  • It is not rocket science to infer on the combined impact of two years of economic slowdown and the COVID-induced recession is unlikely to disappear soon though the authorities would like us to believe that the economy is on the mend. Far from it, the struggle to stay afloat continues for many sectors. Needless to look far to gauge the mood prevalent by observing at the discretionary spending continuing to contract and the people in the know expect it to shrink further in the coming year as well.
  • Looking at the banks amply demonstrate why deposits are growing at 10.9 % way ahead of lending which is expanding at only 5.8 %. There is every likelihood this cycle can lead to prolonged stagnation. Investments to capitalize on supply-side reforms announced by the government so far will be influenced by market perceptions of the strength of aggregate demand. Thus, a change of approach is par for the course move and the government should see the imminent arrival of vaccines as an opportunity to lift the economy with one more big effort.

PC: peixotoadvocacia

  • Nothing works better than infrastructure investments for the government to accelerate envisaged plans leading to cascading effects feeding into multiple contracts to the private sector thereby kick-starting a virtuous cycle of revenue, job creation, and eventually private investment. Given the same, the government should come out with a fiscal stimulus sooner than later to seize on the upbeat mood visible after months of economic distress.

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Krishna MV
Krishna is a Post Graduate with specialization in English Literature and Human Resource Management, respectively. Having served the Indian Air Force with distinction for 16 years, Armed Forces background definitely played a very major role in shaping as to who & what he is right now. Presently, he is employed as The Administrator of a well known educational institute in Bangalore. He is passionate about sharing thoughts by writing articles on the current affairs / topics with insightful dissection and offering counter / alternate views thrown in for good measure. Also, passionate about Cricket, Music – especially vintage Kannada & Hindi film songs, reading – non-fictional & Self-Help Books, and of course, fitness without compromising on the culinary pleasures.

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