THE HARD ROAD TO RECOVERY

To pull the Indian economy out of the lockdown doldrums, the government must act boldly. Experts say nothing short of an additional massive stimulus of 5 per cent of GDP—about Rs 10 lakh crore—will do

- SHWWETA PUNJ  M.G. ARUN AND ANILESH S. MAHAJAN

The coronavirus pandemic has offered countries a tough choice—to either allow the disease to eat through the population before they achieve herd immunity and slow down the spread, keeping economic activity largely steady, or opt for a lockdown to lower disease incidence that can ‘flatten the curve’ and ease the burden on healthcare facilities, but at the cost of most economic activity. India’s choice of the latter—protecting lives over livelihoods—was a difficult one, as the country was already in a slowdown mode, clocking just 4.7 per cent growth in the third quarter of 2019-20. But having bitten the bullet, and effected a 21-day lockdown, what matters now is how India crafts an exit strategy for all business activity if the lockdown is lifted on April 15.

The government now faces an enormous task—to restart the economy before industrial paralysis, job losses and dried-up cash flows become another cause of death and despair. Former RBI governor Raghuram Rajan says India is facing “perhaps its greatest emergency since Independence”. He points out that even the 2008-09 global financial crisis was an extraordinary challenge, “but our workers could still go to work, firms were coming off years of strong growth, our financial system was largely sound and government finances were healthy. None of this is true today.”

THE EXIT STRATEGY