How can India contain the economic impact of COVID-19?
The COVID-19 pandemic has effectively brought normal life to a halt in India. The importance of social distancing and a lockdown in curbing the spread of the virus cannot be stressed enough, but these measures also have huge repercussions on livelihoods and the economy at large, which has already been seeing a slowdown over the past year.
Identifying the key issues –
The immediate issue is to focus on health, which we have never done, and see how you can establish the public health system. And the second is livelihood issues.
Double whammy –
- Apart from the usual economic downturn that the pandemic may lead us to due to demand-supply mismatch, we have a few additional factors in India – an economy which relies very heavily on informal employment, so our reliance for people’s well-being on the broader economy performing and the markets performing is high, whatever role the state may try to play.
- Indian employment figures depend hugely on small and medium companies who are the largest contributors of employment in India. They have a very limited ability of staying powerful at this moment of crisis.
What needs to be done?
- For the small and medium enterprises, we need to address their concerns, either through moratoriums on principal and interest payments or direct salary support to their employees as happening in the UK, Switzerland and France.
- Later, we need to extend it to larger labour-intensive companies if they employ 20,000 people and if they don’t have enough money to pay salaries next month.
- Also, the government should allow regulatory forbearance and extend regulatory forbearance for returns that have to be filed by the taxpayers.
- A lot of things can now be done at home with online trading. To the extent that crowds can be avoided, we need to explore businesses and trades that can be carried on in this hour. For that telecom infrastructure needs to be freed from unusual pressures and regulations.
There is a big concern is about children not going to school. Some from well-off families may learn on the computer, but what about those children who cannot go to school, can’t play, or do anything. About 40% of the population is in the age group of zero to 14. We really have a crisis brewing there with respect to our future demography.
Source – The Hindu
QUESTION – In the event of COVID-19 pandemic, what steps are necessary to minimise the negative economic impact that it may have on our country. Comment.