EXCLUSIVE: Lockdown extension will lead to a faster recovery, says top economist Arvind Panagariya

India has announced the extension of limited lockdown till May 17. But the curbs may not result in a big economic loss this time as the major economic activities have been allowed, especially in orange and green zones.

"Growth calculations won't change dramatically and a two-week extension can't be a decisive factor for economic growth. In fact, extension will help in the faster economic recovery as any further spread will be avoided", saidArvind Panagariya, renowned economist and former vice chairman of a policy think tank of the Indian government, in an interview to WION's Business Editor Sumit Chaturvedi.

Watch the full interview here-

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The nationwide lockdown in India which has been observed since March 25 has seen a gradual easing of activities. The second extension was announced on May 1.

India is preparing itself for the economic challenges that can be faced after the lockdown gets over. Indian Prime Minister Narendra Modi recently held a meeting with Finance Minister Nirmala Sitharaman and other officials on the ways to attract foreign direct investment into the country.

India is striving to become an alternative to China as a manufacturing hub in the post-coronavirus world but attracting FDI will be a daunting task. Also Asia has many destinations for competitive manufacturing.

"India's competition is with Vietnam and Bangladesh where labour and land are available at reasonable prices. Global firms are going to smaller Asian nations for cheap manufacturing as business environment is better in other countries. Also bigger special economic zones are required to attract manufacturers and industries. Small SEZs may not attract investments", said Panagariya who is currently professor of Economics at Columbia University and Director, Raj Center at Columbia's School of international and public affairs.

"Also after coming down initially, the economic growth will bounce back in India."

"The vaccine will possibly be out within a year and we can also start normal economic activity. Then 6-7% growth will be possible very quickly. growth will be better in 2021-22", added Panagariya talking on the possibility of Indian economy bouncing back once the pandemic is over.