From Lockdown to Economic Shockwave

14 days have almost been passed. Being a human it is very much of possible to be bored during this period especially when our life runs like a speed of light. Not just bored, but life became slow. We can understand that how our life became unproductive. Although, there are ample of things to do to overcome boredom. I know, many of you pursued of such stuffs. But what's about the economic slowdown? Social distancing is only thing (yet to) to curb the pandemic, but is this distance not even implicating economic distance?

Well, in layman language it is obvious that lockdown will hamper the economic in vast way. I cannot say what govts will take decision after 14th April, 2020. It may be extended. But what could be happened after lockdown? How economic will survive is major concerned.

If we look step by step, we will find except agricultural sector, manufacturing and service sectors have been exacerbating since last few months. If you remeber our economy has already been slowing down since end of the last year. Covid-19 added extra more havoc. In 2008 economic crisis, where demand side had fallen down but workers were going to work, company's financial strength was largely sound, our government finances were healthy. But none this is true today.

Few days earlier, UNCTAD (United Nation Conference on Trade and Development) has published a report and said that even so, the world will go into recession and this will spell serious trouble for developing nation, with likely exception to the China and India. But UNCTAD did not explain it.

Last day I read an article of Raghuram Rajan in bloomberg, former govornor of RBI, where he suggested some measures that he thought it could help to revive the Indian economy from this pandemic. More interestingly, he sees the economic fallout of the coronavirus pandemic as the 'greatest emergency' India has faced since independence.

So, how the Indian economy will be survived and revived, is a major nail-biting. Did you ever read about "Marshall Plan"? It is a American initiative conceived for a post war recovery in Europe following the devastation of World War II. It was intended to rebuild infrastructure, modernize industry and increase productivity. Such a way India also need to be tailored the Marshall Plan in her own way and according to requirements.

When I am saying 'own way' it directly implies to our banking systems. If banks are having handful of funds then credit returns to the system and broad reconstruction can proceed apace. Raghuram Rajan recomends similar way to the government to increment the loan packages of SIDBI, for larger SMEs.

Although, the initial response from both Ministry of Finance and Central Bank of our country have rightly focussed on providing liquidity. The MoF's Rs. 1.7 trillion relief package includes direct cash transfer and as well as in kind food distribution and insurance for healthcare workers on the frontline.

Another massive stimulus plan will be required to kick start the real economy. One way to organise such funds is to create a government-guatanteed Special Purpose Vehicle (SPV) that is equity-funded by sovereign and pension funds around the world and also loans can come from the Indian Diaspora.

Coronavirus, which is oftenly called 'A rich man's disease and a poor man's burden', massively affected to the poorest and vulnerable sections of our society and also somehow to the lower middle class and daily wagers too. For that reason, government must be taken a multi-pronged strategy. In addition to this, Raghuram Rajan also suggests to a combination of state intervention and private participation.

India has great potential to fight against in any critical situation. Our past remniscents it. But this can be possible if only political issues are kept away and citizens must follow the instructions of govts. This time, once again we need to cheek-by-jowl and fight with this pandemic so that our country will shine.

Thanks for reading!