India must resist the temptation for ‘quick fixes’ that do not address the underlying concerns of the economy even as it copes with the substantial challenges and concerns thrown up by the Covid-19 pandemic, a joint report by a Delhi-based research body and an exporters’ council has said. The report instead calls for focus on permanent solutions to the economic woes.

Resuming businesses on a selective basis in permissible zones, continuing with the fiscal stimulus packages till the economy rebounds, focussing on labour-intensive sectors and navigating the incentives to better support agriculture, MSMEs, logistics and transportation, exports and imports and health, should be the priority, suggests the report brought out by EEPC India and ASEAN-India Centre (AIC) at Research and Information System for Developing Countries (RIS).

The report, which is a compilation of 40 essays from India’s leading economists, trade policy and trade operations experts, focussing on the economic challenges before India and the way forward, has been submitted to Finance Minister Nirmala Sitharaman, Commerce & Industry Minister Piyush Goyal and also opposition leaders, an official told BusinessLine .

Although containing the spread of the virus has been managed well, the report said, the Covid-19 pandemic has disrupted normal economic activity impacting trade and resulting in losses in incomes.

World trade

The World Trade Organization has indicated a fall in world trade between 13 per cent and 32 per cent in 2020, perhaps the highest fall since the Great Depression of the 1930s. The IMF has also slashed growth forecast for the Indian economy, projecting a GDP growth of 1.9 per cent in 2020.

In this situation, first and foremost for the Indian government is to restore confidence in the economic system and the governance and resume businesses on a selective basis continuing fiscal stimulus packages till the economy rebounds, it said.

Exporters, particularly those of MSMEs, need special incentives. For example, exporters have requested for extension of the interest subsidy scheme for a minimum of two years at a higher subsidy rate. However, the incentives can be given to exporters only when those are compliant with WTO trade rules. “Proper managing of incentives is needed so that they reach in the hands of real affected people and/or enterprises and structural reforms are inevitable,” the report added.

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