COVID-19: Following up on the immediate economic response

Some of the measures the Indian government can take to prepare for long-term challenges and opportunities, and the likely case scenarios for the Indian economy.

With COVID-19 spreading rapidly in India, policymakers are worried about how to fight the virus and minimise its impact on the economy. There are no easy answers. In addition to containing the spread of the disease and support those who are affected, policymakers have to be prepared for the long-term challenges and opportunities that may arise once the crisis is over (and it will eventually be).

This policy paper suggests the following measures that the Government of India can take, given the economic context of the country:

Managing the endemic and the resultant public health crisis through augmenting financial resources, increasing insurance coverage, and using technology solutions

Protecting income and employment, particularly for the more vulnerable sections of the society through implementing direct cash transfer programmes backed by adequate monitoring and evaluation mechanisms, and using existing digital payment infrastructure

Supporting the corporate sector to minimise adverse economic impact and facilitate quick recovery through immediate measures (such as credit support to SMEs) or medium-to-long measures (such as building infrastructure and undertaking policies) that help reposition India in the world’s global value chain

COVID-19: Likely case scenarios for Indian economy

The rampant spread of COVID-19 outbreak, across borders and geographies, has severely impacted almost the whole world and triggered significant downside risks to the overall global economic outlook.

Due to the lockdown announced by the Indian Government, the economy may slow over the next few months. For most businesses, the slowdown could be in the form of supply disruptions, fall in consumption demand, and stress on the banking and financial sectors.