The impact of Covid epidemic

Context: An analysis of impact of Covid in different sectors and especially destinies and migrants provides solutions to long-term consequences of pandemic.

Impact of COVID:

• GDP decline: GDP at the end of FY21 would be 1.5-2% and even more if the lockdown continues further. 
• Wage earners and business: Due to panic migration, low availability of workers and fall in business profits.
• Centre-State Relations: Revitalised the wedge between centre and states, as seen in the case of deciding zones and relaxations.
• Global Economy: Although FDI has been relaxed in many sectors, PM’s call for self-reliance defeats the purpose.

Failure in Centre’s strategies

• Not enough fiscal stimulus: The real fiscal stimulus in the hands of the households is mere 1%
• No short-term measures:  Long-term development programmes, FDI in defence and space sectors doesn’t provide solutions for short term miseries.
• Misuse of borrowings: In order to avoid charges of fiscal profligacy, government has gone for borrowings to make up for the revenue shortfall.

Way Forward: Balanced approach

• Focus on short term: need to correct the serious adverse impact of the lockdown on wage earners and MSMEs, building healthcare etc.
• Allow flexibility: Centre must allow states to localize solutions and shift fiscal resources to states.