The Economy Needs a Survival Strategy – and Not Just Stimulus – to Recover From COVID-19

While there may be differences over how stringent the lockdown should be, there is some consensus that without it, widespread community transmission takes place, leading to an overwhelmed medical system and a large number of people dying. India’s economy is largely at a standstill, with most businesses shut and millions of workers without incomes or savings to take care of their families. Empty roads, a dramatic fall in the consumption of petro goods and a sudden improvement in the quality of water in rivers and of air in cities implies that production, trade and transport have come to a grinding halt. With many workers migrating from the producing centres to their villages and their return uncertain because of the fear factor, restarting many of these businesses would be difficult. If a stimulus is to be thought of, it should be after the lockdown is lifted and some businesses start functioning while maintaining physical distancing. Over eight months, till the economy comes back to pre-pandemic levels, in the most optimistic scenario, this would require Rs 18 lakh crore. Extra funds will be required to fight the pandemic both administratively and medically, and no estimate of that is available but the deficit will further increase. Other innovative ways will have to be thought of to raise resources while the economy is largely shut so that people can survive. In other words, with resources dwindling in an economy that is stalling, a survival strategy is needed and not a stimulus which will not work at present. Arun Kumar is Malcolm Adiseshiah Chair Professor, Institute of Social Sciences and author of Indian Economy since Independence: Persisting Colonial Disruption, Vision Books