2021-22 needs a new economic blueprint

It is now clear that the second Covid-19 wave will continue to inflict great destruction across India in the coming weeks, as it has done in the past month. It is also clear that unless this second wave can be tamed and infections brought under control, economic activity in the country will continue to shrink. There are localised restrictions in various states and cities in order to curb the spread of the disease. But alongside, there is a deep sense of fear among citizens — who, remember, are also the primary economic agents as producers and consumers. Till the health crisis is addressed, the fear won’t diminish, and till fear doesn’t diminish, the possibility of the resumption of any kind of normal economic life is dim.

And that is what makes it incumbent on the

State to step in with a new economic plan. Given how badly the first quarter has been hit, optimistic projections of economic recovery this year will not hold. Within a month of fiscal year 2021-22, it is also clear the Union budget numbers will not hold, tax revenues will dip, expenditure requirements will increase, pushing through contentious structural reforms will become more difficult

(and may not even be advisable), and the State’s responsibility for welfare of the vulnerable will only increase.

The central government must draw up a new economic blueprint for the year — this can retain a degree of flexibility given the fluidity of the situation, but it needs to be based on realistic goals, timelines and numbers. This will also allow the Union government to assess the urgent needs of the time — particularly income support to the poor, concessions to the middle class, and perhaps policy tweaks to help the private sector, especially micro, small and medium enterprises, survive and stay the course — and find the required resources for it.