Tarun Ramadorai, Professor of Financial Economics at Imperial College Business School, was interviewed on BBC World News on 29 April.
Tarun, an expert on the Indian economy, was asked about what the post-pandemic world holds for the country’s economy and the stark choices faced by the Indian government while coronavirus (COVID-19) is still spreading.
“If we were to replace the consumption equivalent for wage earning households [in India]...the monthly costs, depending on how big you want the fiscal support measure to be, ranges between 0.65 per cent and 1.65 per cent of GDP per month, which is an enormous amount of money to think about spending,” he said.
However, he went on to stress the difficult nature of the trade-off, since there will be potentially devastating public health consequences and costs if India chooses instead to release the lockdown and allow people to return to work.
More positively, Tarun highlighted the potential mitigating factors, which could mean India isn’t as badly hit by a recession as is currently expected, stressing that the country's population is comparatively young compared to more developed economies.
“The old age dependency ratio – the fraction of elderly people above 65 to the working age population – is 10-12 per cent in India, which is lower than comparable numbers in most advanced economies, and the urban share is only 35 per cent,” he said.
Offering a view on what a post-pandemic world and economy will look like, Tarun suggested the picture could be a mixed one, with a decline in labour intensity in manufacturing as companies increasingly adopt capital-intensive technologies – something that will hit developing countries hardest.
Finishing on an optimistic note, he said he hoped the crisis would also result in “a greater spirit of solidarity across the globe.”
Click here for the full interview with Tarun