India needs better economic response to COVID-19

Nations worldwide have announced fiscal stimulus worth USD 12 trillion to fight poverty, unemployment and to revive the economy. In comparison to other countries, the fiscal package announced by India amid lockdown is only a few crumbs.

Hyderabad:India’s battle with the deadly COVID-19 has reached a decisive stage. A historical lockdown confining 130 crore people to their homes has been extended for another 19 days, following the previous 21-day lockdown.

Prime Minister Narendra Modi announced that the country will face challenging times during the course of next week, but emergency services will be allowed to operate with certain conditions. The number of cases rose to 11,000 as of today, from the previous 523 on the first day of lockdown.

The central government has admitted that these early containment measures have proven beneficial, averting a major healthcare crisis. Though the situation in Kerala and Goa is hopeful with no fresh cases, the situation in Maharashtra, Delhi, Tamil Nadu, Rajasthan and Madhya Pradesh is bleak. Determined to break the virus chain, state governments are literally waging a war by declaring red zones and hotspots.

The majority of states that have sought to extend the lockdown period during a video conference with the Prime Minister, have lamented the financial challenges. PM Modi has to focus on uplifting the lives and livelihoods of people, who have sunk deep into poverty owing to the blanket lockdown.

Economies across the world have collapsed, reminding of the Great Depression. With stagnation of agriculture, services and allied industries, an economic crisis is looming large over the USD 86 trillion world economy. Nations worldwide have announced fiscal stimulus worth USD 12 trillion to fight poverty, unemployment and to revive the economy.

Although the Modi government had announced an INR 1,70,000 crore fiscal stimulus, it accounts for just 0.8 percent of India’s GDP. The three-week lockdown has set the country into an INR 9,00,000 crore loss. The National Real Estate Development Council said that the industry suffered an lost of INR 1,00,000 crore.

Union Minister Nitin Gadkari admitted that the MSME were the worst hit in this pandemic. If revenue-strapped state governments are announcing pay cuts, how can the loss-making private companies pay monthly salaries? 87 percent of organizations in India belong to unorganized sector.

About 90 percent of the national workforce is employed in the unorganized sector. As their livelihoods are on the verge of collapse, the Center must act responsibly.

The pandemic which stuck India during Rabi season, is posing a grave threat to food security. The Center must ponder the suggestions given by associations like FICCI and other economists, and take decisions accordingly. Right strategies must be implemented to stop the nation from breaking into pieces!