The ongoing COVID-19 pandemic hasn’t only lead to the loss of an innumerable number of lives but has also engulfed the global economy, unleashing an era of economic distress and ruin. Apart from the country where the virus is said to have originated (China), most of the world’s nations, especially those treading on the path of development like India, are now facing economic torment. Poor healthcare infrastructure, coupled with a substantial population living in extreme poverty, has further added fuel to the fire.
In India, the situation is such that although severe economic damage and ruin is clear, authorities have still found it difficult to accurately assess the complete economic impact yet. “COVID-19’s epidemiological dynamics are still rapidly evolving in India, rendering difficult an accurate assessment of its full macroeconomic effects,” said the RBI in its annual report.
However, what’s apparent is that the Indian economy is on its way to a double-digit decline. Global institutions and eminent economists have cut the economic growth projections of the country to historic lows, while the issues of unemployment, fall in government revenues, among many others, loom over at large.
In the face of this economic crisis, the Union Government of the country took several bold steps to treat the wounds inflicted by the virus on the nation’s economic system.
The economic initiatives of the government started with the announcement of the ambitious Atma Nirbhar Bharat Abhiyaan by Prime Minister Modi.
By this, an attempt has been made by the government to make the COVID-19-induced economic situation an opportunity to make the Indian economy a bigger player in the world economy, as well as making it “Self-reliant” through a series of efficient, competitive, and resilient policy measures.
Although such bold measures are much appreciated and welcome, it seems they aren’t enough to heal the wounds of economic distress the country now painfully suffers from. These measures, which widely have served the supply side of the economy, must be accompanied with a few more which cater to the much talked about ‘demand’ side of the economy.
A sort of stimulus package, especially focused on the non-salaried middle-class people, is the need of the hour. Income support can be provided, or the government can also explore the idea of a ‘tax holiday’ for a period so as to stimulate demand.
Increase in government spending on public infrastructure should also help in combating the effects of the demand slump of the economy. One may argue that the government itself is facing a tight revenue situation, however, stimulating the demand must be of prime importance. This is the key to revive the economic engine, so that India can at least start its journey on the road to economic revival. For, the engine may start on less fuel, but can’t without the key!