18 OCT,2020 | MEDC
The RBI Governor has expressed confidence in the ability of the economy to reboundsoon from its current slump. The new monetary policy committee (MPC) and RBI have correctly judged that the presently elevated inflation is only a transient phenomenon, which is driven largely by supply side disruptions over the past six months. However, those looking for quick fixesmay be disappointed asthe long-term socioeconomic effects of a major shock of the kind experienced recently can be enduring. The new-normal is not going to be a complete recovery to pre-Covid levels, and we would probably have to accept a GDP growth rate of even 5-6%. The need of the hour is strategic economic restructuring across a wide canvas, which would be no less radical than 1991’s game-changing reforms. The recovery process is convoluted and the government will need to navigate it carefully.
*Photo Credit: Google