Indian Economy | Global Consensus – Going Forward Download PDF
Any crisis having global implications should and rightfully be driven by consensus across major economies not only in terms of the kinds of intervention but also in terms of consensus on the way going forward. First thing in going forward, is to review the damage control interventions, in terms of their effectiveness of having ‘arrested’ free falls of output contraction and unemployment.
It is equally imperative to understand that things have to be seen from a global perspective rather than the country perspective. The next would be to keep in mind that recovery of economies is going to be slow, long-term and more importantly ‘uneven.
It also needs to be understood that stimulus and bailout packages should be seen as short-term and withdrawable, but replaced with sustained long-term reforms. Accordingly, withdrawing of the interventions should be well thought out, staggered and again done collectively or could facilitate fears of double-dip recession.
More than the recovery, the nature of recovery would not be like the alphabet W but U-shaped with the bottom more elongated, which is the reflection of a longer time period and no sudden spurts of growth. Despite the slow process, the way going forward is not to restrict trade or return to neo-protectionism but on the contrary increased trade across countries as a way for economies to expand.
The crisis should not be seen as the collapse of the free market economy and larger role for the respective states in both acting as a producer or a regulator both. It is not to bring back the public sector or regulations but to continue with the market mechanism. It should not be seen as a market failure or question the merits of the market mechanism, but to bring in awareness in the markets about the following: –
(1) Of their larger role and responsibility which is freedom to do business, but not compromising on the moral ethics of businesses.
(2) The desire for expansion and growth can be passions of businesses, but not greed.
(3) They also have societal and responsibilities to their nation.
(4) The interest of the people can and should never be compromised.
At the government level too, there will have to be a greater inter-government monetary cooperation and also at the apex central bank level. At a still broader level, there would be a need to have ‘better global supervision and not regulations over the global financial system’. Finally, the need for the good collective leadership is to provide good governance and also to lead both at the same time.The way going forward has a larger role for the governments of the US, EU, Japan,India and China for resurrection of the global economies as fundamental and primary ^ objective. That is, economics dominating politics and setting aside political differences.However, the most important in going forward lies in understanding, the importance of trade, not return of neo-protectionism, in these troubled times. Multilateral trade could have never ever been in economic history, as relevant, as it is today for revival of the economies.