Take a guess. If before the severe lock-downs began in India, anyone was asked a question about the possible implications of the kind of disruptions we had faced, what would have been the answer.

A single answer would unanimously have been “economic annihilation” if the respondent was talking before the actual experience. Today, are we really annihilated? Is the situation so catastrophic? It looks we have done far better than we could have even dreamt of.

With hindsight, if we look back, given the kind of stress and disruptions we have been through during the pandemic, we have not done too badly. We have been bruised and battered but surely not fatally wounded.

A veteran in the field of India’s economic policy management, Dr C. Rangarajan, a former RBI governor, besides being the chairman of the prime minister’s economic advisory council for many years, has sounded not so pessimistic in a report prepared jointly with the economics division of Ernst & Young.

Rangarajan has in turn argued that despite the lock-down from late March, wide segments of the Indian economy never really round to a halt anytime. He cited the farm sector, government, essential administrative services, the defence wings and many more like food supplies and trade.

He estimated that approximately segments accounting for 40 per cent-50 per cent of the total weightage of the national production were not much hurt. He ventures to say that the overall growth for the Indian economy could really be positive rather than negative. That is, the GDP should show a small growth than a whopping contraction in the year.

There are contrarian points of view. Some of these are taken even more seriously now a days because these are coming from outside — American ivory towers. Unlike, Rangarajan’s these are often a very lofty point of view, compared with the granular details of people like Rangarajan who were on the field for many many years.

Raghuram Rajan, former governor of the Reserve Bank of India, had launched a volley of canon shots at government economic policy makers alleging they were complacent about the state of the Indian economy. The trigger for Rajan’s inter-continental ballistic missiles were, in the first place, in response to the revelation of the latest set of national income statistics showing a nearly quarter drop in the first quarter.

He tried to “frighten” them out of their alleged state of inaction and immediately start a fresh round of stimulus measures to re-start and rejuvenate the economy to prevent it from being “atrophied”.

His fusillade was more pointedly directed at the recent observations of the chief economic adviser, Krishnamurthy Subramaniam, that India was just about to enter a phase of sharp spurt in growth and economic activity. Subramaniam spoke close on the heels of the release of the latest set of figures which showed a huge contraction of the GDP by 23.8 per cent in the first quarter of the current fiscal year.

Rajan, it may be recalled, had left RBI stewardship in a situation when his free-wheeling comments on the general law and order situation of the country had created some embarrassment for the government. Otherwise, Rajan was rumoured to be a favourite of Prime Minister, Narendra Modi, till then. But Rajan’s relations soured with the government there were talks about Rajan being chosen as the shadow finance minister in case of possible Congress’ return to power.

Rajan has ever since kept close tab on the happenings in India and expressed his readiness to return home and help in economic policy formulation and economic management if there was any occasion for it.

Be that as it may, Rajan’s contention, articulated in a post in the social media, has a ring of truth. Essentially, what Rajan has written is that after an initial burst of activity and policy announcements for restarting the pandemic battered economy, the authorities had withdrawn into a “shell” and showing a sort of complacency or inaction with regard to ramping up the economy.

It is undeniable, under the assault of disease and lock-down, the economy was shrinking. If the current slack was not corrected and activity improved, the growth potential of the country would be seriously hurt and by then it might be too late with already too little stimulus.

Dr Rajan had argued that the largest economy in the world, that of the United States had provided 20 per cent of its GDP in numerous stimulus and credit off-take measures. Yet, USA was worried if its economy would be able to return to the pre-pandemic levels by the end of 2021.

Compared to the US effort, India has provided much less stimulus and this assumed further importance in view of the hostile neighbourhood we were faced with. He was obviously referring the current stand-off with China and the importance of having a sound economy to ward off these external threats.

“If you think of the economy as a patient, relief is the sustenance the patient needs while on the sickbed and fighting the disease. Without relief, households skip meals, pull their children out of school and send them to work or beg, pledge their gold to borrow, let EMIs and rent arrears pile up...Similarly, without relief, small and medium firms - think of a small restaurant — stop paying workers, let debt pile up, or close permanently. Essentially, the patient atrophies, so by the time the disease is contained, the patient has become a shell of herself," Mr Rajan has written in his post.

Unquestionably, there is scope for course correction and more meaningful policy interventions.

Hence, the need for critical action right now rather than keeping your power dry for future use. We have to mobilise resources and spend it now to revive the Indian economy.

Good thought and calls for closer examination. Maybe, government to bypass its own economic think tanks, like the NITI Aayog, which has singularly failed to produce viable and innovative policy responses and look for inputs from experts like Rajan. (IPA Service)