Corona Impact on Economy: Do We Need a Miracle to Stay Unscathed?

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(Photo: iStock / Altered by Arnica Kala / The Quint)

Let us go with the assumption that we have so far managed to ‘contain’ any possible community transmission of the coronavirus or COVID-19. More than the stakeholders, we should be grateful to the almighty for this mercy.

In a country of more than 130 crore people, containing the number of active cases to around 200+ thus far, has been nothing short of a miracle. Let us all hope that it stays that way till the world finds ways to tame the virus.

The Measures the US Took

But this is just one part of the story. The other part is about the damage the coronavirus pandemic has done to the global economy, and the kind of wealth destruction it has unleashed. While most of the countries have suffered as a result and much more damage is apprehended in the coming months, the response of our government has been very different from other counterparts.

The US has been the most proactive in countering the adverse impact of the virus.

The US Federal Reserve was the first to slash rates by 50 basis points, followed by a similar cut a few days later. The American Central Bank has launched a mega quantitative easing programme, similar to the one launched in the aftermath of the global financial crisis in 2008, to keep the financial system up and running.

Mega USD 1 Trillion Fiscal Stimulus in the US

According to CNBC, a mega USD 1 trillion fiscal stimulus package is about to be unveiled there soon. In the midst of apprehended job losses the likes of which the US has not seen before, “Treasury Secretary Steven Mnuchin said the administration’s plan could put cash directly in the pockets of Americans. And administration sources told CNBC there could be USD 500 billion to USD 550 billion in direct payments or tax cuts; USD 200 billion to USD 300 billion in small business assistance and USD 50 billion to USD 100 billion in airline and industry relief.”

You can argue that the US has the resource and is in the election year. Elected representatives therefore will do whatever they can to mitigate the impact on the people and businesses.

UK’s Stimulus Package Equivalent to 15% of the Country’s GDP

But what about the UK, that has announced a mega fiscal package? The Chancellor of the Exchequer, Rishi Sunak, of the newly elected government, has announced a a stimulus programme equivalent to 15 percent of the country’s GDP. He says: “We will support jobs, we will support incomes, we will support businesses, we will help you protect your loved ones. We will do whatever it takes. Today, I am making available an initial 330bn pounds of guarantees – equivalent to 15 percent of our GDP.”

The measures includes providing businesses access to “government-backed” loans, grant to micro enterprises, “mortgage holiday” for three months for home loan borrowers, and specific measures for worst affected sectors.

Other countries too have announced mega plans to mitigate the impact of the virus. France, for instance, has announced a 45 billion euro package, and Italy says it will spend 25 billion euros to help revive their economies in the aftermath of the extraordinary crisis.

Indian Govt’s Lack of Urgency

There is no denying that these are advanced economies with lots of resources. But they have launched extraordinary programmes to provide relief to people and businesses.

Our government, on the other hand, has not shown any urgency to address the looming economic crisis.

If recent measures are to be believed, the government seems to be more concerned about the health of the treasury rather than the people.

After massive fall in the prices of crude, the least the government could do was to pass on the benefits to the people. A few more rupees in the hands of the people would have been much helpful in the hour of crisis than maintaining the fiscal health of the country.

What is more, on the request of the Centre, the Supreme Court stayed the orders of “the Kerala and Allahabad high courts, which restrained banks and tax authorities from launching recovery proceedings owing to the novel coronavirus outbreak. The stay was granted after the Centre moved the SC challenging the lower courts' orders. In its petition, the government argued that the order will incentivise people to defer their bank and tax dues and could hit the government’s kitty to the extent of Rs 2 lakh crore every month.”

If the government’s submission in the apex court, and what it did to the prices of petrol and diesel do give any indication of things to come, it seems any relief measure will have to wait – if and when it comes.

Even the Reserve Bank does not seem to be in any hurry to cut rates or provide other relief.

Should we wait for any miracle on the economy front too, hoping to come out of the crisis unscathed?

(Mayank Mishra is a senior journalist who writes on Indian economy and politics, and their intersection. He tweets at @Mayankprem. This is an opinion piece and the views expressed in this article are that of the writer’s own. The Quint neither endorses nor is responsible for the same.)