HOW TO KICKSTART THE ECONOMY

THE DEADLY SECOND WAVE OF COVID BATTERED AN ALREADY BRUISED ECONOMY. INDIA NOW NEEDS POLICY VISION OUT OF THE ORDINARY TO RESTORE CONSUMER CONFIDENCE, BUSINESSES AND LIVELIHOODS

- M.G. ARUN & SHWWETA PUNJ

AS GRIM VISUALS OF PEOPLE struggling to find hospital beds, oxygen and medici­nes for their loved ones and long queues at crematoriums made all the news in May, Covid 2.0 was silently wreaking havoc else­ where too: on the economy. The unexpec­ ted ferocity with which the second wave struck threatens to derail whatever little recovery India made in the second half of the previous financial year (according to the latest growth numbers, India’s econ­omy grew in both consecutive quarters of the second half of the previous fiscal, com­ pared to negative growth in the first half). Though India avoided declaring a national lockdown, states perforce had to impose their own lockdowns that cost the country around $8 billion, or over Rs 58,000 crore, every week in May, according to investment firm Barclays.

Shutdowns and layoffs in factories pushed unemployment to double dig­ its: 14.73 per cent for the week ending May 23. Job losses and pay cuts, coupled with lockdown restrictions, have choked sales of several FMCG (fast­moving consumer goods) categories, as well as consumer durables such as televisions and refrigerators, apparel and footwear. Car sales have declined by over 25 per cent in April compared to March, while two­wheeler sales have dropped over 27 per cent, according to the Federation of Automobile Dealers’ Associa­tion (FADA). The travel and hospitality sector, already bruised by the severe lockdown in 2020, continues to suffer.

Several firms have revised the country’s earlier growth estimates of 11­ 12 per cent to 8 per cent or even lower (see graphic: