Hysteresis of recession of self-reliance.

 "The International Monetary Fund (IMF) said on Thursday that Prime Minister Narendra Modi's call for a self-reliant India, i.e. 'Atmanirbhar Bharat' is an important initiative." According to director-communications department at the IMF Gerry Rice "the economic package announced under this self-reliant initiative" "has supported Indian economy", but to integrate India in the global value chain, "improving the efficiency and competitiveness of the economy is critical". But, self reliance and "efficiency and competitiveness" are mutually contradictory. "For starters, import substitution industrialisation (ISI), which entails progressive replacement of imports by domestic production, is precisely the strategy we pursued until 1991," wrote Prof Arvind Panagariya. In 1991, India faced a balance of payment crisis and survived by pledging 67 tons of gold as collateral to raise $600 million. ISI "encourages domestic production through tariffs and output subsidies", resulting in growth of "small-scale firms focused on making quick profits with no plans to become exporters." "Five of the eight high-frequency indicators compiled by Bloomberg News gained last month, while two were unchanged and one deteriorated. This kept the needle on a dial measuring so-called animal spirits steady at four," wrote Anirban Nag. The rate of coronavirus infection in India is the same as that in Brazil, but market analysts have continued to upgrade Brazil's growth prospects while continuing to downgrade that of India, said Jehangir Aziz. Because Brazil provided income support to poor families. "The economic impact of Covid-19 outbreak is progressing from a supply shock, to a demand shock as incomes and jobs shrink according to a survey by BofA Securities and it expects demand boosting measures from the government." Which means more spending. Will the government have Rs 800 billion to buy and distribute coronavirus vaccine to all the people, asked CEO of Serum Institute Adar Poonawalla. "British telco Vodafone Grouup Plc won a decade-long battle against the Indian tax department's demand of Rs 20,000 crore (Rs 200 billion) from its entry into the country in 2007, said people with knowledge of the matter." "The World Bank expects remittances to South Asia will drop 22% this year", because of global economic contraction due to the virus. Money is so tight that"The government wrongly retained Rs 47,272 crore (Rs 472.72 billion) of goods and services tax (GST) compensation in the Consolidated Fund of India in 2017-18 and 2018-19 and used it for other purposes, the Comptroller Auditor General (CAG) said in its report of government accounts." Without government spending and reforms there is a danger of "strong and pervasive 'hysteresis' effects", wrote Prof Vivek Dahejia. Hysteresis means a persistence of the present economic recession well into the future. Time to get hysterical?