India was able to bend the curve of coronavirus cases through its extreme lockdown measures. But along with this came the tapering of the economy.
The Economist report highlighted, “In March alone no fewer than 140m workers are thought to have lost their jobs, catapulting the unemployment rate from 8% to an unprecedented 26% nationwide.”
Not only Goldman Sachs, a bank, expects the economy to contract by 45% this quarter, and by 5% over the full year, but also the National Council of Applied Economic Research, a think-tank, predicts a contraction of 12.5% this fiscal year unless there is a huge stimulus.
To salvage the economy, the Modi government pledged 20 lakh crore rupees of spending, equivalent to 10% of the GDP. Yet many doubt the move. In particular, what “Mr Modi delivered was a hotchpotch of supply-side inducements and prods such as credit guarantees, along with reforms whose impact will only be felt in the medium term, at the earliest.”
Amid these measures, “two of India’s Nobel laureates, the economists Amartya Sen and Abhijit Banerjee, had suggested that monthly emergency payments of up to $100 could help tide over many families”, said the report.
In place of that “the sums offered so far amount to $6.60 each a month for perhaps 200m poor women, and promises of a one-off $26 apiece to some 70m farmers.”
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