India should take 'measured approach' with stimulus packages to deal with COVID-19: Panagariya

India should resist calls for mega relief and stimulus packages that pitch for generous availability of credit to even unviable businesses and focus on a more "measured approach" by limiting interventions to provision for working capital and ensuring basic necessities for all to deal with the impact of the COVID-19, eminent economist Arvind Panagariya has said.

The former NITI Aayog Vice Chairman said that India, like nearly all other countries in the world, faced "difficult choices" against the COVID-19 pandemic.

"So far, India has walked the tight rope as well as it could have, given its resources and management capabilities," Panagariya told PTI.

Elaborating on the path ahead for India as it navigates health and economic concerns in the wake of the COVID-19 pandemic, Panagariya said there have been calls for mega relief and stimulus packages from various quarters.

"The scale of some of these packages is so large as to give some sections living standards that exceed what they enjoyed prior to the advent of the coronavirus on Indian soil.

"These packages also pitch for such generous availability of credit that businesses that would be unviable in normal times would get a long lifeline in the post-corona world," said the professor of Economics at Columbia University and Director, Raj Center at Columbia's School of International and Public Affairs.

He emphasised that the Indian government "needs to resist those calls and take a more measured approach" by limiting interventions to the provision of food, shelter and basic necessities of life for all; forbearance on payments of outstanding loans; and extra provision of working capital including what will be necessary to cover outstanding wages from lockdown period to enterprises."
"Therefore, until a vaccine is available, corona curve must be kept sufficiently flat that the health system can handle the additional emergencies without being crippled. That requires restricting economic activity," he said, adding that such a scenario presents the "dilemma and tight walk for the government."