The Indian economy has been lurching from crisis to crisis for more than a decade now. The latest crisis is unfolding as we speak, with the COVID-mitigating country-wide lockdown already taking an economic toll on industries with factories closed, and a huge population dependent on the informal economy unable to earn its daily wage.
This current crisis is arguably not the government’s fault. A pandemic of this nature is not something anybody expected, and a fool-proof solution for India’s 1.3 billion population is a tough task at the best of times. These are far from the best of times. Government revenues are down, the private sector was hurting even in the run up to the lockdown and is now nearly terminal, and people paid barely enough to get by are now getting fired.
At a time like this, it is essential that there is perfect coordination between the government and the various sector regulators. Indeed, we have already seen several signs that this coordination is there, with the Ministry of Finance, banking regulator RBI, stock market regulator SEBI, and insurance regulator IRDAI all coming together to present a comprehensive package to tide over this crisis.
This kind of coordination was not always the case. In fact, the lack of such coordination, coupled with episodes of individual mismanagement, allowed a strong growth momentum to slip away from India’s grasp over the last decade, as succinctly explained in Puja Mehra’s book.