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Reigniting the economy...

Reigniting the economy...
Forty days of 'lockdown' has not led to a flattening of the curve but has surely restricted the burgeoning infection numbers and have brought in both, a sobering effect and a realization of the new normal - that of disruptions in supply chains, social distancing and remote working.
The lockdown has had its impact on the economy - reduction in consumption, impact on the labour market and livelihood in the informal sector in a large measure. The impact on certain sections - informal sector workforce, gig workers, daily wage earners, hospitality, travel and tourism and MSMEs has been rather severe economically. With the continued lockdown, conditions would deteriorate sharply. The bigger question is how do we bring about the economic resurgence?
Clearly the key issue at hand is our ability to stimulate demand and consumption in the economy at this point of time. Only with a renewed demand and heightened consumption can we expect the secondary sector and tertiary sectors to start looking up. With a pile up of inventory across industries the production wheels are unlikely to start. Putting money in the hands of the consumers is the key task, increasing taxation and Covid cess are short term measures and would lead to a further crippling of demand, with due respect to the young turks of the #IRS ‘FORCE’ this is one idea whose time has not come!
The second round of stimulus is expected soon, with the expectation that the fiscal measures will stimulate the demand side, recent measures of increasing the liquidity to support the MF mkt is in the right direction. So, the key question now is how do we go about doing this?
A graduated response is suggested to avoid losing out on the sacrifices and the ensuing gains made in the lockdown period. Movement only in the contiguous areas within the green zones, movement to and from one zone to another to be avoided, work from home can be a virtue and so on...
On a concluding note – remember the number of deaths in the infamous Spanish flu was almost double of what it was in the first wave. The people felt so bad about the quarantine and social distancing measures that when they were first lifted, the people rejoiced in the streets with gay abandon. In the coming weeks millions died due to the second wave – Let’s not repeat history in the time of Covid...!
Sanjiva Jha, CEO and Founder BroadArks, May 1st, 2020

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