scale of production after which exports can beginbesides high import tariffs increase the demand for domestic resources by importcompeting industries making them costlier to obtain for producers of exports thus an import tax acts also like an export tax lerner symmetry theorem in international economics hence it becomes impossible to push for exports when there is apolicy of import protection in placeso it is essential to reverse the tariff increases of the last five years and continue with trade reforms beyond even those of the p v narasimha rao and atal bihari vajpayee administrations labour law reforms have begun in a few states but prime minister narendra modi needs to use his political capital to push even deeper labour reforms through the problem of land acquisition also needs to be tackled skilfullythere is a demand problem structural reforms mentioned above will take time to have an impact so something more needs to be done to immediately fix the shortterm health of the economy this is the right time to be a bit flexible about deficit targets also the different types of government expenditures are not the same in terms of their impact expenditures on infrastructure which improve private sector productivity and provide employment opportunities directly and indirectly are easier for goi to pay off than those on government subsidies that primarily benefit the middle classthus goi can be more creative about the type of spending it can also provide tax cuts to the middle class and the poor thereby putting in their hands higher disposable incomes at the same time goi can be more innovative in finding alternative sources of revenues that dont represent reductions in real personal disposable incomes for instance privatisation can raise revenues from the sale of public sector enterprisesthe recent corporate tax cuts are an important reform in the right direction this can stimulate both domestic and foreign investment with relatively advanced technology coming with the latter it can boost both export volume as well as the sophistication of indian exports both of which have been known to stimulate growth the immediate impact of these reforms would be an increase in aggregate spending by firms also multiplier effects through consumption by workers should be expectedcredit where its duewhile cleansing the banking sector was essential it has made credit more difficult to obtain thereby negatively affecting aggregate expenditure especially on consumer durables creditworthy consumers and producers need to obtain credit more easily goi seems to be aware of this problem and is trying to come up with plans to deal with itthe economys temporary problems can easily become more permanent unless both longterm and shortterm measures are taken simultaneously the silver lining here is that crises bring about reforms and there is no reason not to be optimistic in this regard in the case of the current economic crisisthe writer is professor of economics syracuse university new york us et contributors published on oct 31 2019 at 1010 am ist telegram facebook copy link be the first