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Centre’s Covid-19 fiscal stance is flawed -CP Chandrasekhar and Jayati Ghosh

-The Hindu Business Line

Fiscal policy in India has been very timid amidst harsh, inefficient (in terms of public health outcomes) lockdown spells. Unless this changes, the economy may dive further

As India faces the biggest economic crisis since Independence, it is being led by a central government in denial about the severity of the impact on lives and livelihoods, and spreading false hopes about the immediate future.

The Monthly Economic Report of the Union Finance Ministry claims that already the economy “is witnessing a sharp V-shaped recovery” suggesting that nothing drastic needs to be done by the government to return to a stable and positive economic growth trajectory.

This may just be yet an exercise in perception management that the current government excels in, but it presents a misleading picture of the state of the economy. Even more worrying, it could lull the government into believing its own rhetoric, and thereby not taking the measures necessary to ensure economic revival.

One indication of this is in the fiscal stance taken during the period of the lockdown and its immediate aftermath, during the so-called “Unlock” phases. Remember that the Indian government imposed one of the most stringent lockdowns in the world, that too with only four hours’ notice, on to a population that is dominantly without any form of social protection. It then did not provide compensation for the livelihoods lost, even as the public health measures taken were so inadequate that the disease has continued to spread.

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