NCAER for coordinated fiscal, monetary steps to push growth, contain inflation

Economic think-tank NCAER on Wednesday called for coordinated action on fiscal and monetary fronts to contain inflation and push growth hit by the COVID-19 crisis. Fiscal and monetary policies have to be carefully coordinated to battle on both fronts, push economic recovery, and at the same time contain inflation," said Sudipto Mundle, Distinguished Fellow, NCAER.

Economic think-tank NCAER on Wednesday called for coordinated action on fiscal and monetary fronts to contain inflation and push growth hit by the COVID-19 crisis. The Indian economy shrank by an unprecedented 23.9 per cent in the April-June quarter of the current fiscal. Expressing concern over the devastating but not unexpected news of steep fall in growth, the NCAER said "we are witnessing an unprecedented Black Swan event" following the outbreak of the COVID-19 pandemic. The stringent nationwide lockdown helped gain valuable time for the public health system to respond, it said in a release. However, this has come at the cost of a major humanitarian crisis and a severe shock to economic activity, with a large negative multiplier impact on jobs, incomes, revenues, savings and investment, it added. The NCAER had on May 15, 2020 projected 26 per cent contraction in the GDP for the first quarter of 2020-21 and 6 per cent rise in inflation. The actual inflation turned out to be 6.9 per cent. "Unfortunately, both assessments have turned out to be fairly accurate. The economy is now in a severe stagflation crisis. Fiscal and monetary policies have to be carefully coordinated to battle on both fronts, push economic recovery, and at the same time contain inflation," said Sudipto Mundle, Distinguished Fellow, NCAER. India's complex economy has much potential to combat 21st century challenges, but also faces many obstacles that persist in infrastructure, skilling, regulation, informality, and governance, the think-tank said.PTI NKD CS ABMABM