The unprecedented health shock from the COVID-19 pandemic has destabilized the world economy, affecting both big and small economies, which have nosedived. Industrial activity and trade are at an abysmal low, and gross domestic product (GDP) of countries including India is falling through successive quarters. There have been several analyses of economic shock from the pandemic, such as from Bloomberg1 and Morgan Stanley.2 The conversation among economists has already shifted from ‘how bad’ to ‘how long’ it is going to be.
Governments have rushed in with economic recovery packages. The Government of India has announced a slew of packages estimated to be about 10 per cent of India’s GDP. These are designed to provide relief to low-income classes, liquidity and credit support measures for manufacturing and other sectors, and targeted sectoral reforms for increasing investments.