The huge rate cut by the Federal Reserve to lift market sentiment as an antidote to the negative impact of COVID-19 is bizarre to say the least (Editorial page, “Monetary policy can’t combat the COVID-19 impact,” Mar. 7). It is like administering cancer drugs to a heart patient and somewhat similar to the corporate tax cut announced by the Centre to revive private investment, which did not have any such desired impact. It is to the credit of the Reserve Bank of India (RBI) that it has not come up with such knee-jerk reaction so far. India needs to follow a multi-pronged approach to contain the virus and its impact on the economy and to revive economic growth. Implementing universal screening of all the arrivals from abroad, tracing and isolating all the contacts of the already infected, combating and containing the virus with all the arsenal at the government’s command are necessary. On the economic front, formulating a holistic policy of large scale public institutional finance to MSMEs to quickly establish alternative supply lines vacated, albeit temporarily, by China, and taking appropriate fiscal measures expeditiously to revive the purchasing power of rural India are essential. These measures would have a cascading effect on the demand, which in turn will have a salutary impact on private investment. The present crisis generated by the COVID-19 virus is not only an excellent opportunity for India to reduce its dependence on import of pharma ingredients, electronic components, automobile parts and many other products from China, but also a fortuitous occasion for the country establish itself as an alternative global supply source.
Kosaraju Chandramouli,
Hyderabad
