Arthashastra - The Economics Club of IIM Bodh Gaya held a webinar on the Indian Economy on 25th March 2021. The event revolved around the impact of policies and governance on the Indian Economy as a response to the pandemic and the Indian Economic Survey 2020-21. The session began with a welcome speech by Dr. Vinita Sahay, Director, IIM Bodh Gaya who shared and emphasised on the importance of economics, economists and how important it is for the young minds of the country.
The guests were Ms. Aakanksha Arora, Batch 2013, Indian Economic Service, Deputy Director, Department of Economic Affairs, Ministry of Finance, Ms. Gurvinder Kaur, Batch 2014, Indian Economic Service, Deputy Director, Department of Economic Affairs, Ministry of Finance and Dr. Naveen Bali, Consultant, O/o Principal Economic Adviser, Ministry of Finance.
Dr Naveen Bali started the session by discussing the present rationale for making rules and regulations. He discussed the Arrow Debreu model and Knightian Uncertainty Framework to explain how the regulations are made. He said although regulating is important, overregulation in an economy does more harm than good.
Ms. Aakanksha Arora carried forward the discussion and gave insights on how Indian policymakers handled COVID-19. The last fiscal year was the first time since 1980 that the GDP contracted. She even showed statistics about the performance of the agriculture, service and industry sector of the five instances GDP contracted since 1950.
Every year except for last year, the agricultural sector contracted with services and the industry sector being unaffected. It was primarily due to the policies and ease of movement given to the agriculture sector that it recorded an uninterrupted growth last year. The pandemic also made the world familiar with the existence of uncertainties in the world and how important it is to keep policies flexible.
Lastly, Ms. Gurvinder Kaur explained the philosophy regarding the fiscal response of the government. She discussed how the masses reacted to this unprecedented event. One of them being the increase in precautionary savings, due to which PMJDY balances recorded exponential growth. Ms. Kaur also discussed counter-cyclical fiscal policy and how it will be the most sustainable solution to create a positive impact on GDP.
The session enabled the students to get a deeper understanding of how the formation of policies takes place and how they are tested in extreme situations like financial crisis, pandemic, etc. Flexible and modifiable policies prove best in unprecedented times. The discussion also gave a comprehensive analysis of the ESI 2020-21. They explained how the economy would see a V-shaped recovery due to the mega vaccination drive. The agriculture sector will still record 3.4% growth, while the industry and service sectors contract by 9.6% and 8.8%, respectively.
As the discussion came to an end, students asked a few questions regarding the ESI 2020-21, sustainable investing and the second wave of COVID-19. The session was concluded by a vote of thanks from Dr. Anirban Sengupta, Assistant Professor, Economics and Business Environment and Dr. Tamali Chakraborty, Assistant Professor, Economics and Business Environment.