 Yeah, so hi everyone. My name is Rucha Atakle. I'm from the Center for Development Studies in Kerala, India. I'm a master's student. So welcome to today's webinar which is a part of the COVID-19 series organized by SOAS Economics and the Open Economics Forum. You can follow them on social media. I've mentioned the handles in the chat box and if you're tweeting about today's event, please use the hashtag economics of COVID. So our speaker today is Dr. Jayati Ghosh who is talking to us about inequalities in fiscal stance in the COVID-19 era. Now, of course, she doesn't need an introduction, but I'll give it a go. She's a chairperson of the Center for Economic Studies and Planning at the Jawaharlal New York Nehru University in India where she has been teaching for the past 34 years. She has worked extensively on macroeconomic policy, gender development, international economics, employment and finance, and she's one of the founders of the Economic Research Foundation in New Delhi and is on the board of a lot of other organizations. She is the Executive Secretary of International Development Economics Associates. So let's begin. Dr. Ghosh will speak for about 20 to 25 minutes after which we can take some questions from the audience. Questions can be sent any time during the first 40 minutes through the chat box and we'll take them at the end. So I think with that, let me just hand it over to Dr. Ghosh. Thank you so much, Ritu and thank you all for joining us today. So I'm going to talk about the impact of the pandemic specifically on one kind of inequality. Now, we all know that there is in fact a massive increase in inequality because of the pandemic with countries and between countries and it's also evident that developing countries have been particularly hit because they were affected even before the disease actually struck. So developing countries were hit by the collapse in global trade, by the collapse of all kinds of other foreign exchange revenues, by the inability to access capital or the very high volatility in capital flows and by in fact increasing the inability to even pay the external debt that many of them are holding. So already there was this economic impact. This was dramatically worsened by the reactions to the pandemic which took the form in many countries of very, very severe lockdowns. Now, we have to remember that developing countries actually have typically 70% informal workers. In some countries it's much, much more. In India as we know it's more like 95% informal workers and that means that they would be dramatically affected by any lockdown that stops economic activity and prevents mobility. So that for a period of three months they are effectively without income if they're informal and they have very little social protection. But in addition to that there are a number of formal workers also who were very badly affected. So developing countries were not just affected by the pandemic and the global trade and finance but by their own economic policies which took the form of very, very, the containment essentially took the form of very, very severe I would say even brutal lockdowns in some countries that completely took away the possibilities of livelihood. This would require major public expenditure just to compensate workers who have lost their incomes in livelihood. And in most developed countries we've seen that. We've seen that even when they've had very partial lockdowns or temporary lockdowns or closures and so on, we've seen in the advanced economies a sudden revival of Keynesianism, a discovery if you like, a rediscovery of the importance of fiscal policy. And so we've had very, very large fiscal stimuli in most countries already. The packages that have been announced in the US already it's about 14% of GDP just in terms of the increased fiscal spending. In Germany, France it's in the range of 5% of GDP. In Japan it's as high as 22% of GDP. Very, very large fiscal spending measures that are designed just to shore up economic activity. Not necessarily to put it on a growth path but just to recognize that because you have stopped people from functioning, therefore there's going to be a collapse in income. And so you have to do something to just prevent a complete collapse. You have to put some kind of money in the hands of people so they can continue to consume and keep the economy brought up in that way. In developing countries by contrast, we have not seen that kind of response. And this is really striking. It's pretty much across the board but some countries are worse than others. Even the countries that have claimed very large fiscal packages in South Africa claimed 10% but people say that it's more in the region of 3.5%. India claimed again 10%. It was more in the region of 1% of GDP in terms of the declared new spending. And if you look at what has been spent so far it is less than half a percent of GDP in the three months since the pandemic broke and the lockdown has occurred and so on. So very, very small fiscal packages and also by the way what is also interesting is that these are significantly lower than they were even after the global financial crisis. So if you compare the developing countries in the G20, if you compare their fiscal stance now relative to what it was in 2008-9, you find that it is usually a small fraction of what was spent even then. And yet this is a much bigger crisis. So these are developing countries are spending less today at a time when the crisis is much, much bigger. What's going on? Why is this happening? And yet advanced economies have so-called thrown caution to the wind and so it's not just that monetary policy has got even broader if you can imagine such a thing but fiscal policy is also on a roll. Developing countries by contrast the emerging markets are being very reticent even China at a relatively low but then China has managed the crisis much better and restarted economic activity already. So it needs perhaps less of a aggressive fiscal stance to recover. Most other developing countries have shown very limited increases. And why is that? The essential reason for that is basically global finance and there are two ways in which global finance is inhibiting developing countries today and this has real consequences. It's not just a question of aggregates and so on. It has real consequences in terms of your ability to feed people, your ability to provide minimum livelihood to people to compensate them through some cash transfer for the incomes that they have lost for the entire range of dealing with people who are already at the margin of subsistence. So it has very major consequences for poverty, deprivation, hunger. But in addition it has very significant macroeconomic impact. And that macroeconomic impact is basically that you're pushing the economy deeper into a hole. Austerity today is absolutely the worst possible middle. And why is there austerity? Because tax revenues have collapsed. It's not surprising when economic activity collapses, tax revenues also collapse, people earn less, they pay less, they sell less, they pay less taxes. Because the tax revenues have collapsed, governments feel, oh my goodness, I can't have a very large fiscal deficit. And so they cut back on spending simultaneously. Now that's bizarre because that is the pickle expression of the paradox of drift. Those of you over economic students will recognize this. It's basically in a recession if you spend less, you are creating a further economic decline because you are generating negative multiplier effects. By spending less, you're contracting the economy further. And that adds to the economic decline at a time when the household sector and private corporations are already spending less. The government is the only agency that can actually spend more. And that's why in advanced economies, the governments are spending much more. In developing countries, some are spending a little bit more, some are actually not spending very much more. And possibly over the next few months, we'll end up spending less. This fiscal austerity is completely counterproductive because it means that you are actually reducing economic activity further, which means you would reduce tax revenues further, which means that when you then turn around and check whether you have to actually have a reasonable fiscal deficit, you would have reduced your tax revenues. So even your lower level of spending will still give you a higher fiscal deficit. So it's a completely counterproductive and macroeconomic strategy. Why are governments doing it? What is wrong with developing countries that they're doing it? First is that they actually are caught in a bind. Those who have external debt are typically caught in a bind where they have major payments to make in foreign exchange, in hard currency like dollars or euro. And they have a very large outgo in those. And they're worried about how bond markets will respond. Even countries that don't have large external debt like India are stuck because they actually are worried about what the credit rating agencies will say and whether that will induce capital flight. So countries like India and Mexico, they do not have to do austerity and nonetheless engaging in it because they're worried about what global capital will do. And global capital, especially as expressed in the form of the credit rating agencies, tends to say that we are very concerned with fiscal deficits. So this has added to the way of thinking of these governments, which is actually dramatically worsening the level of economic activity and therefore also the government finances. It's a very peculiar world in which developing countries are enthralled to global finance in a way that the developed countries are not. And it reflects the inequalities in global finance that basically financial markets will tolerate deficits in the advanced economies and they will not tolerate deficits in the developing countries. That has created a very peculiar macroeconomic imbalance whereby we find that developing countries are heading for greater economic contraction. And yet they are also going in for measures that will add to the contraction because they're worried about being seen as riskally irresponsible by the credit rating agencies, which is a proxy for global finance in general. They're worried that if they do this, if their ratings fall below investment grade or if the bond markets take offense or whatever, that they will find it harder to access capital. They will find it more difficult to borrow, to have these deficits and they will experience capital slight, which will cause currency devaluations. This is a very deep structural inequality. Now, what do we do about it? What do developing countries then, how do we deal with the situation like this? It's very clear that as long as you have completely mobile capital, you will be subject to these things and you will be forcing yourself to obey these very stupid laws, which are actually making things worse for your own need. So what you really need to do is actually put in capital control. Again, one developing country on its own trying to do it will create all kinds of problems. It has to be a coordinated effort, but we definitely need capital controls and the IMF is in a situation now where it's also more willing to accept the need for these controls to prevent very hot money flows and very major speculative movements of capital. We need to bring in debt relief to prevent those economies that have large external debt that will be unpayable in the current year, to prevent them from having to address that and it's not just a moratorium. Kicking the can on the road is not enough. You need to restructure that debt to reduce it. And we need to have a major allocation of SDRs. The IMF actually had proposed that a 500 billion expansion. I think we need much more. We need at least one trillion, but nonetheless there was a proposal to expand, which was rejected by the U.S. and of all countries, India. Unbelievably, India also joined the U.S. in rejecting this proposal, which India would have benefited from. But there we have it. Now, that's the immediate thing. We need immediately debt relief, capital controls, and SDR allocation to enable developing country governments themselves to actually spend as they need to spend. Okay, so that's the first thing. But in the medium term, we have to think of shifting the way the global economy is trapped. And everyone talks about a green new deal. I have been saying that we need a multicolored new deal. It has to be greenhouse. We have to take into account not just the existential threat of climate change, which is definitely affecting us already, but also a whole range of other environmental disasters and over exploitation of nature that has to be changed. So we need major public investments to reorient our economies in a green direction. But we also need that new deal to be purple, that is to say it focused on the care economy. That's one thing the pandemic should have brought home to us, the significance of care and healthcare in particular, and the need to put a lot of public spending into care. And it has to be red. It has to be egalitarian. It has to stress-free distribution. And it has to emphasize progressive taxation. Eventually, we need much more taxation of multinational wealth taxes. We need taxes on the highest income bracket to pay for all of this. And we need that money to be spent in ways that improve the quality of life of ordinary people. So this is what we need, but we find that the politics is very different. And we find that the global structures are very different. So now it's absolutely essential to raise our voices for a global multicolored new deal that would actually enable developing countries to provide citizens with their social and economic rights. Okay, let me stop here and we can take questions. Sure. If anyone has questions to ask, please send us the questions in the chat box. I think I have opened the chat box, but I do not see any questions. I don't think so far there are any questions. Okay, well, somebody should please ask a question because I kept it short, thinking that there would be questions. Okay, Shivani, could I specify certain policies for the care sector? Yes, certainly. You see, one of the things that all societies are doing, but India in particular, if you are from India, Shivani, you will know exactly what I mean. We are under providing care massively. We are under providing it not only in terms of the number of care workers per population, but also the way in which we actually reward and recognize care work. So one of the things that we find is that where you under provide care, a lot of it gets put onto unpaid labor within the household, typically performed by women. And then it becomes this vicious circle where women are doing all the care work unpaid in their homes. Then anyone who does paid care work is also similarly unrecognized and unrewarded by society so that they also get very low wages. And in India, we have the case where it's not just in the private sector, but even the government sector hires ungenerous workers and ashas at a fraction of the minimum wage and doesn't provide them with even the minimum things that are required, which would enable them to function in a reasonable way. So let's think of a country that actually provides reasonable levels of care. Sweden is typically, it's one of the countries with an adequate or at least a reasonable level of care facilities. If you look at the number of care workers per population for just the childcare, early education, elderly care, and broad healthcare, then you get 13 workers per 100 people, okay? 13 care workers for 100 population. In India, we're closer to two. Think how much we're under providing, massive amounts of under provision, and most of those two are in the private sector, they're not in the public sector, so they are unaffordable by ordinary people. So if we actually want to provide minimal levels of care, we need to increase the number of care workers six times, and we need to pay them properly. That's a massive investment. How do you finance this investment? And I've talked about wealth taxes. I've talked about increasing corporation taxes, especially for multinationals who at the moment are getting away with being nothing. And so, you know, we need to bring in a system of unitary taxation that would actually force them to pay the taxes that domestic companies pay. And a bunch of other measures which would actually enable this expansion of care work. Now, the other thing we have to remember about the economy is that it's one of the sectors that is very little affected by technology. That is to say that unlike a number of other activities in agriculture and manufacturing and so on, which can be where people are replaced by machines or by intelligent, you know, ICT and so on. In care work, it's fundamentally relational. You will always have to have a human being. A human being can be assisted by technology, but never replaced. And therefore, it's very important. And in fact, it's one of those things where you get better care. The quality improves when there are more people. If that's the case, then it is unlikely to be impacted by new technologies. So it is very much one of the activities of the future. So if you really want better care work, if you really want better employment, then focusing a lot of activity or care is a very important way of doing that. And that also gives you a lot of positive multiplier things over time. So that as you're employing more people, you are generating indirect employment as well. Okay, there have been a bunch of other questions. Let me just see. I'm unable to open that box suddenly. So will you just open, would you tell me what the questions are? I can read them up. Yeah. So the first one is from Professor Saras Devanu. Can you discuss some of the differences among developing countries in terms of their possibilities to increase fiscal spending? In many terms of what they should be spending on, or what they should be raising the money from, what they should be spending on, immediately it's very obvious. Right now, you have to raise demand. Because as I said, informal workers have been without incomes for three months, at least, and are likely to be without income for a longer time. You have to put income in their hands. You have to compensate for the incomes they've lost. I'm not a rotary of cash transfer general. I noticed that Satoshi Miyamuria has just asked me about the universal basic income. I'm not a huge fan of it. I much prefer employment schemes. And I would add employment schemes that cover a whole range of activities with universal transfers for those who can't work. So that for the elderly, for the disabled, and for the differently abled, and so on, yes, transfers and child grants as well. But in general, I prefer employment schemes. However, this is a special case. Right now, you have not allowed people to work. And so you really have to provide some compensation. It is governments that have prevented people from working because of the lockdowns and other containment measures. So there has to be some compensation. So right now I would say yes, definitely cash transfers to all households with some exclusion criteria for at least three months, or covering at least three months. That's immediate. And then of course, employment programs. Direct employment programs like we have the rural employment guarantee, I would say in an urban employment guarantee, add more such things. In developing countries, you need to focus on agriculture, which is also under threat, and the food economy, which is under threat. So there are any number of, and of course, the health sector, which we have been talking about, which has been massively ignored and underfunded for decades, and privatized in all kinds of terrible ways. That needs a huge impetus in terms of public spending. She has another question. Are governments of countries in the global south calling for capital controls? Actually, unfortunately not enough of them. Some are. Argentina has. There are other countries that are bringing in capital controls in different ways. Many countries in the recent past have done little measures here and there. Thailand has done something. Korea has done something. Korea is not developing. A bunch of other countries, Nigeria has brought in exchange controls. So many countries are actually bringing in capital controls because they have no choice at this point because there's just so much volatility. But we need a much more coordinated demand enabled by the IMF. Antonella asks if you could speak about the possible strategies of restructuring debt in developing and emerging countries, and how to connect that with the existing fiscal deficits? Well, you know, there are already a number of plans for the restructuring of debt. And of course, they would vary from country to country. But what is absolutely essential is that we have to have a globally recognized sovereign debt restructuring mechanism that does not allow a small minority of handouts to hold the country to ransom. At the moment, because the global debt, the system is structured essentially through New York and London, which means everybody all developing country debt is structured through these two countries and therefore the laws of New York and London determine how developing countries can restructure. Even if they can get 80, 90 percent of their creditors to a greater restructuring deal, 10 percent holdout can destroy it. And we have the example of Argentina to show how that can happen. And unfortunately, as long as the laws are completely determined by the legal systems of the US and the UK, which are unfortunately very pro-creditor, this cannot be a feasible way. So we need to have a global restructuring, sovereign debt restructuring mechanism, something along the lines that the IMF itself had proposed way back in the 1990s and was killed by Wall Street. But there has to be a global recognition that a lot of developing country debt is not going to be paid. 1.8 trillion is due this year, 2.4 trillion due next year. Half of it is not going to be paid because developing countries are going to be able to pay it. Related to that, Sky asks if the IMF has planned anything so far in regards to debt relief in order to assist developing countries during the COVID era? And would such measures be effective? So far, there has been talk. Yes, Christina Georgieva has said that there needs to be a restructuring of debt, which is a good positive sign. There hasn't really been any major move towards this. Some country, Argentina, has actually put forward for its own sake a debt restructuring mechanism. Yet that's being opposed by some bondholders, not all. The IMF has come out in support of that mechanism. So the IMF is actually taking its life in better position on debt restructuring right now. It needs to be something that is, shall we say, legally enforceable. Because as long as it's not, and as long as the laws of these two countries can dominate over all other things, it will not be effective. So we really need the governments of the US and UK on board on this aspect. So I think they are related to that. Tobias Franz asks, given the obvious limitations of the IMF World Bank and WTO, how can we mobilize around achieving a global purple new deal within as well as outside of the current institutional framework? This is such a difficult question, and many people say this. Many people say that, well, listen, this current global architecture sucks. It's terrible. It's anti-developing countries, anti-the poor, anti-the working class. It's very blatantly pro-capital. It's encouraging all kinds of rent seeking activities and further concentration of global capital. So how can we trust it to change? The thing is that you cannot actually build a lot of the institutions immediately. And the more you actually say, well, you know, we can't work with these, so we will have to work outside these, the less able you are to create any kinds of positive change to our developing countries to somehow come out of this mess. Because remember, we are talking about a very, very large crisis, something that has never happened before in the last century, and which is going to devastate the populations of especially the developing world. How do they deal with that? How do they even keep people alive? You have to use some of the existing structures. You have to bend them to your will in a way. So for example, the IMF is the only global institution that can create global liquidity. So and the thing about SDRs is that they are not determined by the IMF. The IMF doesn't have to actually say this country gets this much and that country gets this much. There are norms. And so they are distributed among all IMF members according to quota. Just a massive access to foreign exchange like that would make a huge difference right now to many, many developing countries. So let's use that. I mean, yes, the IMF has been very and not just unreliable. It's been disastrous for developing countries. But let's use the fact that they actually have this capacity, which at the moment nobody else the global system does to force them to generate this new liquidity, which can be accessed across the world. And for some countries, it would mean getting 20, 30 times their existing foreign exchange reserves. That's a huge difference it can make. Right. Abdul Basit asks to arrest the effects of an unequal global financial system. Is it prudent to look towards domestic capital generation and supply chains? Yes, but how are you going to do that? You see, in fact, one of the things that this pandemic has done and the lockdowns have done is that it destroyed both demand and supply. That's unusual. In what time supplies get hit in a financial crisis, demand gets hit. Here, both have got hit. So you have to address both. Yes, you absolutely have to address demand. You absolutely have to put money in the hands of those who would spend and so on. But you also have to address supply. You have to make sure that essentials get provided adequately. And that's not easy because, you know, essential, what are essential commodities, these items of mass consumption? What about their import relationships? How do you make sure that they get access to all of their inputs? What about the output structure, the distribution channels and so on? Now, ensuring all of that cannot just be left to the market at a time like this, which means that another thing that developing countries have forgotten about for a long time, which is planning. And that also has to come back into the picture. You have to coordinate it between central and state governments, federal and provincial governments. You have to coordinate across sectors. You have to coordinate across ministries. That does not happen on its own. You really have to bring back a planning framework to enable supplies to people when you allow demand to rise. Me, Coleman asks, the World Bank seems to be of the view that developing world economies will not be as badly hit by COVID-19 as the North. What do you think underlies this assessment and do you agree with it? No, I think they're living in Cloud Cuckoo. There's just no question. Developing countries are already very, very badly hit. And they might hit much worse because of the fact, as I mentioned, that their fiscal stance is also much weaker, or in some cases, non-existent. So it's completely wrong. But, listen, World Bank, I'm in predictions and projections about global growth have been notoriously wrong over the years. And they've also been very politically determined, as we know. Yes, they know that when countries have particular approaches to economic policy, that often they are undermined by the attempts of the World Bank and others to say that, you know, these are not the desired policies and so on. Rucha, is that the background noise coming from you? This kind of question? I think there's something going on in the flatter world. Oh, I see. Okay. So, yes. So, hello. Yeah, it's gone now. So, that's good. Yes. So, essentially, the major approach of both the IMF and the World Bank has been always optimism. They always err on the side of thinking that things are much better than they are. And they don't factor in the impact of austerity. They are really bad at recognizing that public expenditure is important to play a role in ensuring up economies. So, they assume that when governments cut things, the private sector will step in and fill the gap. And, of course, that doesn't happen. So, it's not just India. The World Bank is getting it wrong, or the IMF is getting it wrong on pretty much a whole range of developing countries. The actuals are going to be much, much worse than what they are projecting. You have to, sorry, Rucha, you've gone silent. Sorry, I had accidentally muted. Yeah. So, N asks, how soon do you see the Indian economy recovering from the crisis? So many people have been thinking about this, and there's all this discussion. Is it V-shaped? Is it U-shaped? And so on. So, here's the thing. It's not any shape until you know what the economic policy response is. And, unfortunately, if the economic policy response is wrong, then it can be L-shaped. It can actually just stagnate. And that is the fear that right now the Indian macroeconomic policy stance has been so counterproductive and so computing to the economic decline that the chances are that it would actually stay bad for a very long time. And this is also because we don't still know the full effect of the pandemic. We're really still very much on the upward part of the curve. We don't know. And there seems to be absolutely no sense of how the government's epicentral and state level will deal with it. They're more or less just allowing it to happen. And the only strategy was lockdown. They didn't other than Kerala, which has shown how it can be handled through a public health perspective. Most of the other states and the central government for sure have much more a law-in-order approach rather than a public health approach. And that means the disease will just spread and spread, which in turn also has a negative economic impact. Even if you lift the lockdown, there will be fear, there will be concerns about infection and there will be people dying as well, all of which have economic impact. So I think unfortunately it's going to be bad for quite a long time. All of this required a very vigorous government once it required massive increases in public spending to counter as I said the economic decline, but also to counter the health crisis. Neither of these is happening. So until that happens, we are in for a very, very bad scene. It will get worse for a long time until the government is finally forced to respond adequately. Tobias has another question. With the dependence on external funding of countries in the Global South, where can local resources for such a change be generated from? So, you know, here's the thing. Why do we need the external resources? Essentially because we are importing various goods and so you are searching for foreign exchange to enable you to import. That's one foreign exchange gap. The other is your savings gap. You don't have enough domestic investment and therefore you're searching for foreign investment. In many developing countries and emerging markets, that's not true anymore. In fact, there's even a savings surplus in many countries because we are adding to our external reserves, which is a reflection of a domestic savings surplus. That reflects the fact that domestic investors don't see enough investment opportunities. So you have to create the investment opportunities. In other words, it is also a demand constrained system. So what we're not realizing is that it's only foreign resources that is holding developing countries back. It is their own domestic macroeconomic conditions. So the private investment is not rising up even to meet the level of domestic savings. And that tells you that there is a basic inadequacy of demand, which was existing before the crisis. But of course, the crisis has made it that much worse. The pandemic has dramatically increased it. To deal with that, you just need straightforward government spending in the immediate term financed by borrowing from the central bank. That's all. Just deficit financing. Good old deficit financing with the US government is doing, the Japanese government is doing. Everybody's doing, except developing countries. This is the limit in which you simply borrow from the central bank to spend more. That generates positive multiplied rates, that raises economic activity, that raises your tax revenues, etc. So in a way, what you really need to do is to just begin by spending and then see how that, and of course, part of that spending should be directed, and I said, towards ensuring the supply of necessities. So you don't get an inflation at the same time. But if you do that, then you will get the investment in any case. And both domestic and foreign will come when there's a growing market. But as long as you're declining and stagnating, you can't simply sit back and say, we have to wait till resources come because they won't come. I think that also answers Malik's question about the possibilities to cater to the fiscal deficit. Rahul has a question. Can you comment on recent government decision regarding agricultural policy that is selling their output anywhere in India? Will it really benefit farmers, and will there be any kind of inflation in the short run? Yeah, so you know, I don't think I'm worried about inflation in the short run for this particular policy. What is more worrisome in this policy is that over time, in the immediate term, it might feel like it's good for farmers and for consumers. But over time, we know that this kind of thing actually creates monopsony that is large companies come to dominate over small farmers. And it creates monopolies at the consumer end, so that the distribution gains are huge, particularly for corporate agriculture or for corporates who deal in the distribution of agricultural goods. And both farmers and consumers. We have seen this happen over and over again in many, many parts of the world. There's no reason to think it will not happen in India. So there is a concern in the medium term, not immediately. Immediately, it's likely to appear that it's actually good for both, because that's the way in which the whole process functions. They've been by, you know, showing the good side, yeah, the sweetener deals that they're called. But within a few years, it's very clear that it ends up with farmers being squeezed at one end and not getting the proper value for their products and consumers being squeezed at the other end with distribution margins growing up massively. Prena asks, could you suggest some supply side policies that could be used in India to address recovery in the supply side of the economy? Well, basically, you have to think about which are the sectors where the supply side concerns. And those you have to see are the things where the pandemic or the lockdown have stopped or destroyed the supply chains. And that really means looking, as I said, at the input-output relationships. So if you say that all food products are essential, do you think that they're important to actually make sure that all of the inputs required for safe farming or food distribution are readily available? Which then means ensuring the supply of those. If you're looking at certain, if you're looking at medicines as essential, then ensuring that all the inputs are available. So you basically have to do this sector by sector. It cannot be a broad supply side. The way the government looks at supply side, the Indian government looks at supply side is unfortunately all wrong. They simply think of incentives for producers in general. But that's not what's required. What you really require is to make sure that input-output relationships for the production of mass consumption items and essentials and the things required for restructuring the economy, the greening of the economy, that those are provided. So basically what I'm talking about is a supply side set of measures within a planning framework, within a broad planned and coordinated framework, not blanket measures providing incentives, tax rebates, special credit and so on. Those are not for me supply side measures. Professor Yanis is asking, do you think that environmental conditionalities should be attached to expansionary fiscal and monetary policies and what is your view on climate reparations? I think, okay, let me begin with the second one first. I think climate reparations are certainly valid and justified and you know there's a massive ecological debt that the north owes the south. But do I think that they are going to happen? Unfortunately, no. Certainly not with the current political configuration and even with any immediately foreseeable political configuration. So while I do believe that climate reparation is a just demand, I don't think it's a particularly realistic demand. I mean that maybe I hope I'm pessimistic, maybe I'm unduly pessimistic, maybe it can happen. So if there's enough political change in the north, but at the moment it doesn't look like it. The other question about whether there should be conditionalities, I believe yes and I believe that this should be true in both the developed and the developing world. And in particular I think that it's very important for developing countries not to follow the exact same trajectory of the north even because there are technologies available. But in turn means that the transfer of technologies which are available in the north, which are being inhibited by intellectual property rules, those have to be altered. So we have to actually, the greening, I think people don't realize how much adequate ecological transformations and environmental protection and greening of economies requires a complete alteration of intellectual property rights structures because at the moment they are heavily designed to prevent developing countries from accessing the technologies they need or even from developing the technologies they need. So a lot of the global financial architecture and the global legal architecture has to change if we want to actually promote many more green activities. It's not just a question of putting official limits on how you use funds and so on. But it's also that you really need a broader international framework. That will allow for green activities to be promoted. I think I missed one question before by Ananya Kajpuriya. How can the spending be increased? As we know spending are mostly done by middle class not poor and stimulus packages not given them enough. Do you think that giving direct cash rather than loan can help in this? Well I would say you need both and we also know that the poor spend all their income. They cannot afford to save usually and today's poor would have already disabled. They would have been surviving on borrowing. So cash in the hands of the poor will immediately lead to increased consumption and this can happen and should happen through some direct transfers as I said to cover three months when they were not allowed to work. So compensatory cash transfers I would call them rather than any other kind of universal basic income. These are what they are employment programs which automatically generate wage incomes that are also spent immediately. Most spending is not done by the middle class. The reason we say that is because in the middle we have very skewed income distribution. Proportionately speaking the poor spend much greater proportion of their income typically all of their income. They're putting money in their hands would immediately have very very high multiplier effects and would lead to what Hyman Minsky called a bubbling up of the enemy rather than trickle down. So Marie asks how do you think COVID will impact the global financial structure in the long run? That is what are your predictions for what financialization might look like in the future? Oh dear so you know I am very bad at predictions. With the global financial crisis happened I thought my god any financial system that makes such a big mess is going to get fixed by societies that society will not tolerate financial systems that generate this level of inequality, incompetence and volatility. I was wrong clearly so a lot depends on the politics because after the global financial crisis when they've made the big mess they come back and everybody else is left in the solution. It really reflects the power of the financial lobby which has not reduced unfortunately. However this is a very different crisis we are already seeing attempts to financialize the illness the disease we are seeing the impact of that but the thing about a pandemic is that it doesn't stop spreading and so there will be a point where even when societies say that you know allowing everything to be privatized allowing health to be privatized and therefore financialized doesn't suit me either because while I can protect myself now I can get infected so maybe I'm interested in making sure that nobody gets infected. So I think it really depends on how much of a upheaval this causes overall. I think you can already see the beginnings of this in the north. I was just now just before this I had a discussion where Joseph Stiglitz and Tamar Piketty were both saying that the politics is changing both in the US and in Europe. There's much greater acceptance of wealth tax there's more recognition that you have to regulate finance there's much more popular desire to actually bring in regulations that would prevent the kind of immense volatility and wrong incentives that are created by the current financial system. It's true the governments of these countries feel differently but you know people do bring social change eventually if not immediately eventually. So I think I would say I hope for the medium term but not for the immediate future. Professor Sara Sivanu asks what would your response to mainstream economists depiction of this crisis as an external shock be? It's complete nonsense. The reason you have something like this spreading so rapidly is of course first of all because of globalization which is quickly accelerated the space of spread of infection but also because we allowed our public health systems to collapse. It's worth noting that the few countries that have actually managed to deal with this pandemic rather well. People talk about South Korea but I think Vietnam is a better example Taiwan China with India the state of Kerala Cuba. These are all countries that have very strong public health systems that were maintained for different reasons and it's the absence of proper functioning public health systems the the erosion of health spending over decades the privatization of health the inequalities that it's spread in the other funding which have made us all so vulnerable to this pandemic we need not have been and the specific countries have shown that you did not be. Satoshi has a follow-up question to your initial argument which is why do you think countries like India have to constrain their spending even though their external debt is manageable and what explains the power of global financial capital over the government of India? So you know this is the thing it's you're absolutely right why they don't need to there is no reason for the government of India not to go out there and spend hugely by borrowing from the reserve bank they don't have an external constraint oil prices are down and therefore we're probably going to have a current account balance or even surplus the economy is collapsing so there's no you know you desperately need to spend and you can spend you do not have an external constraint at the moment we don't have an external debt so there is absolutely no reason for this government to be so enthralled to global finance but they are now whether it's because it's gotten to their heads or they just lack imagination I'm not sure what it is or because they are globally integrated in the in the class sense you know that everybody's children is part of the global investor class or something for whatever reason this government is basically following the tickets of credit rating agencies and a few bond investors and mutual fund investors and portfolio investors at the cost of not just people of the country right now and the workers in general but of the future of the economy to me it's incomprehensible if somebody had asked me even four months ago that will the government of India behave like this I would have said no I would have said they won't do everything I expect or want they will do maybe 15-20% but to do zero that's striking and that's all because of this peculiar at least explicitly because of this peculiar obsession with keeping global investors happy the funny thing is that it won't even keep global investors happy because since they won't spend the economy will go down the tube further the GDP will collapse and because it collapses your tax revenues will also collapse you will end up with a higher fiscal deficit to GDP ratio so the investors won't like you anyway you're still not going to make them happy so it's inexplicable I really don't understand I think that covers all the questions and we are almost at the close of the hour as well so yeah I think if anyone has one last question maybe put that put it out I don't think okay well thank you all yeah yeah thank you everyone for joining us and I hope that you will come for the next webinar which is on 17th and that is on the gone COVID-19 and the great lockdown what type of crisis by Victoria Stadheim so I hope you will join that and this has been fantastic Dr. Bush it was very insightful especially from an Indian perspective since I am in India as well thank you thanks so much okay bye bye everyone thank you