By Akshita Goyal as well as Bangladesh, Sri Lanka and Bhutan. Other significant roles that Dr. Arvind Virmani has handled include Principal Advisor, Planning Commission; AA FORMERFORMER Member, Telecom Regulatory Authority of India (TRAI); Appellate Tribunal for SEBI Act; and Chief Executive of Indian Council for Research on International Economic Relations (ICRIER). On the academic side CHIEFCHIEF ECONOMICECONOMIC of his career, he was Affiliate Professor, George Mason University (and Distinguished Senior Fellow, School of Public Policy - CEMP, GMU). A noted author in economics and other related areas, Dr. Arvind Virmani ADVISORADVISOR SHARESSHARES HISHIS has published 33 journal articles and 20 book chapters in the areas of macroeconomics, growth and finance, international trade & tariffs and international relations. His books include, The Sudoku of India’s Growth, From INNOVATIVEINNOVATIVE VIEWSVIEWS Uni-polar To Tri polar World: Multi-polar Transition SEASONAL MAGAZINE RECENTLY CAUGHT UP WITH DR. ARVIND VIRMANI, CHAIRMAN OF Paradox, Propelling India From Socialist Stagnation To FOUNDATION FOR ECONOMIC GROWTH & WELFARE (EGROW) AND FORMER CHIEF ECONOMIC Global Power, and Accelerating Growth and Poverty ADVISOR TO KNOW HIS VIEWS ON HOW TO STEER THE ECONOMY BACK TO GROWTH, AS Reduction – A Policy Framework for India’s PART OF OUR COVER STORY, URGENT CURES FOR THE COVID-19 ECONOMY. Development. Currently, Dr. Arvind Virmani is the Chairman of Foundation for Economic Growth & hief Economic Advisor (CEA) is a celebrated post in Welfare (EGROW), a non-profit, multi-disciplinary India. Dr. Manmohan Singh, who went on to become public policy organisation engaged in independent, the country’s Prime Minister, was India’s Chief high-quality research in the areas of macroeconomic Economic Advisor between 1972-76 under then policy, public welfare, national security and diplomacy. C Prime Minister Indira Gandhi. Dr. Raghuram Rajan Seasonal Magazine recently interviewed Dr. Arvind was International Monetary Fund’s (IMF), Chief Economist and Virmani for our cover story, Urgent Cures for the Covid- Director for Research before he became Chief Economic Advisor 19 Economy. Here are the excerpts of this interaction:. under Dr. Manmohan Singh and later under PM Narendra Modi. Another leading economist, Kaushik Basu who was also CEA under Dr. Singh in UPA-2, later became Chief Economist of World Bank. In other words, only economists of the highest caliber have been entrusted with this crucial duty by most governments. However, despite their exemplary expertise their performances have varied, as it involved various other factors too like the prevailing economic challenges, the ruling government’s overall policies, election agendas, global issues and so on. Dr. Arvind Virmani, who was a top performing Chief Economic Advisor, handled the crucial post between 2007 to 2009, in UPA-1 under Dr. Manmohan Singh and could guide the economy to one of its best performances ever. Later, Dr. Arvind Virmani was appointed as the Executive Director at the International Monetary Fund (IMF), Washington DC, representing India (as its Ambassador to IMF),

53 SEASONAL MAGAZINE RECENTLY INTERVIEWED DR. ARVIND VIRMANI with Dr. Arvind Virmani for our cover throughout the period of the opportunity for long-term reform, Dr. FOR OUR COVER STORY, URGENT CURES FOR THE COVID-19 ECONOMY. story, Urgent Cures for the Covid-19 lockdown, no such tax concessions Virmani astutely pointed out that the HERE ARE THE EXCERPTS FROM THIS INTERACTION: Economy. are required. In his tenure as the Chief time is ripe to encourage THE TAX PAYMENT Economic Advisor to the Government diversification of supply chain. He Starting with his views on the 'Life OBLIGATIONS FOR THE of India, he had strongly advocated applauded the RBI's move to reduce n infective virus has thrown versus livelihood' debate, he affirmed ESSENTIAL GOODS the case of direct benefit transfers the repo rate for it increases the extent off the normal in our lives that while lockdown was a necessary (DBT) rather than provision of goods. of monetary transmission and AND SERVICES and caught us off guard. shock, it will be extremely costly if He believes that DBT is a flawless maintains adequate liquidity. INDUSTRY AND THAT Such emergencies called for extended. He cited an EGROW procedure that is completely sealed FOR THE REST OF THE urgent responsiveness and Foundation research paper which In a lighter vein, Dr. Virmani also said and avoids leakages given that the ECONOMY CAN'T BE A attentiveness on the part of estimates the effect of lockdown on that in times of crisis, interest rates alternative of goods provision through the Government. As in many other the economy to be 5% of annual GDP must be negative. On the welfare STRAIGHT-JACKETED. Fair Price shops is administratively countries, Indian government took a in a month. Going deeper, he side, he said that the misery of poverty inefficient. quick step of imposing a lockdown. explained that for this calculation, can be eliminated and not just During such VUCA (Volatile, researchers broke the economy into When we were discussing the topic alleviated through the largest three Uncertain, Complex and Ambiguous) 3 sectors- essential, contract services of how the Government is mitigating welfare programmes with Aadhar as times, we had a chance to interact and the rest of the economy. As the the damaged economy under the vehicle. Another pragmatic data speaks, Essential services lockdown, Dr. Virmani suggested that suggestion offered by Dr. Virmani was constitute around 40% of the the legal asymmetry is still left to be that of a negative income tax to ensure economy size. In the Essential goods addressed. The tax payment redistribution of wealth from the and services sub-sector, we asked obligations for the essential goods and haves to the haves-not. about his views on whether the services industry and that for the rest With this isolation period in the government should distribute these to of the economy can't be straight- backdrop, we routed our interaction the poor or cut the tax rates for these jacketed. Clear differentiation and to the suggestions of eminent to increase their affordability. concession ought to be made for the researchers NYU's Marti industries which have been In response, Dr. Virmani emphasised Subramanyam and Ashoka's Anisha completely closed shop under that if the sector has been in operation Sharma. They had mooted a lockdown. Government SPV providing arm’s This will not only help the hard-hit length pseudo-equity up to 25% of industries (like Auto, capital goods profitable MSME's revenues which and construction) spring back into can later be brought back by the action post-lockdown but also MSMEs. assuage business sentiments. For the Dwelling on this idea of giving question of payment of wages to daily MSMEs interest-free funds, Dr. labourers, he asserted that the Virmani drew our attention to a Government can't expect the proven fact that most interest subsidy businesses to bleed losses when they support has been most effective when have got no compensation apart from they have been rolled out for a limited an extension of the moratorium on period of time. Moreover, he is of the loan repayments. opinion that after simplification of the As we moved onto discuss a course tax structure under GST, tax payment of action to use this crisis as an history of MSMEs must be used as an indicator of offering credit guarantees. DWELLING ON THIS IDEA OF GIVING Covid-19 has presented the economy with a brand new challenge-one that MSMES INTEREST-FREE FUNDS, DR. would lead the Government to learn VIRMANI DREW OUR ATTENTION TO and unlearn dynamically as the agents A PROVEN FACT THAT MOST in the economy gradually emerge out INTEREST SUBSIDY SUPPORT HAS of the lockdown. Given the promising BEEN MOST EFFECTIVE WHEN THEY status as of today and the buoyancy HAVE BEEN ROLLED OUT FOR A of India’s growth in the past, Dr. LIMITED PERIOD OF TIME. Virmani urges us to look forward. (Akshita Goyal is currently an ISB PGP candidate of 2021 batch)

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