Covid-19: Prepare a new economic plan | HT Editorial – Editorials
Few events have brought people, communities and countries around the world together like coronavirus disease (Covid-19). There is still much that is not known about it: how long it will spread; how many people canTo die; when it will decrease But there is a clear and inescapable conclusion. Covid-19, in addition to testing healthcare systems around the world, will severely contract the global economy. Although the Organization for Economic Cooperation and Development has assessed that global growth could fall 50 basis points, a recession cannot be ruled out. For India, this is bad news. Struggling with an economic slowdown, the virus will only deepen the crisis.
The roots of the economic downturn are simple. There is a set of measures necessary to keep citizens healthy: social distancing, reduced mobility, mechanisms for working from home, closing of public spaces and offices, prohibition or travel restrictions. But the same measures slow down the economic engine. Public health measures, which, of course, must remain the highest priority and must be meticulously and rigorously followed, are paralyzing supply chains and reducing the ability of companies to function. They are also having a direct impact on revenue and demand. Factory production will be reduced; retail trade will decrease; services will suffer; unemployment will increase; spending will decrease; some sectors, such as aviation, tourism and hospitality, will be devastated; trade agreements will be affected; productivity will decrease; markets will continue to fall; And, if or when the disease spreads to rural India, in the case of community transmission, agriculture and allied activities will be affected.
The problem is global. The United States, for example, is preparing for a fiscal stimulus, and is even considering direct cash delivery. A $ 850 billion stimulus package has been proposed. In India, the problem is particularly serious, because a large part of the population operates in the informal economy. Daily salaried workers do not have a financial cushion, especially given the weak or non-existent social safety net. The government urgently needs to prepare a comprehensive economic plan for coronavirus contingencies, to keep companies viable, including through tax relief and the extension of loan repayment terms, among other measures; and, the provision of income support, if necessary, to the most marginalized segments of the population to satisfy their basic subsistence needs. The economy will worsen before improving. To be prepared.