Stimulus hinges on length of lockdown

Global trade growth could plummet by up to a third in 2020 due to the Covid-19 pandemic, the World Trade Organization said, warning that the numbers would be "ugly". "World trade is expected to fall by between 13 per cent and 32 per cent in 2020 as the pandemic disrupts economic activity and life around the world," the WTO said. The downturn "may well be the deepest economic recession,” it said.

The central government's next big economic stimulus package hinges largely on when the lockdown ends or at least partially lifted. With the government still weighing the pros and cons of lifting the lockdown and many states insisting on an extension of the lockdown period, sources say the talked about stimulus package is unlikely anytime soon.

At the same time, the government is learnt to have prepared a balanced economic design to tackle the post-lockdown crisis and reviewing developments during the lockdown period on a daily basis. The government is keen to ease the lockdown impact on various sectors and revive the economy.

The proposed package, sources said, will focus on continuity of the recent economic measures and the welfare of the labour force. Also, the government may redesign some welfare schemes for the farmers. It is expected that the final call on this will be taken by the Prime Minister's Office (PMO) in consultation with the finance ministry and other key ministries.

"What is worrying us is the rising of number of Covid-19 positive cases and hence, the possibility of an extension of the lockdown is there, as most of states are unwilling to lift the lockdown. Our prime focus is to save the lives first and then the economy. The economic booster package is still under consideration but it may not happen any time soon. The decision of giving relief to corporates, especially travel, tourism, hospitality and MSME sectors, among others, may be taken after lifting the lockdown, if not fully but even partially," a top government source said on Tuesday.

"We are constantly monitoring and reviewing each and every economic activity on a day-today basis," the source said.

"For the economic measures, there have been 10 empowered groups of senior bureaucrats, which were constituted by the Prime Minister to prepare India's response to Covid19 and one such group is assigned to take stock of the economic situation for the post lockdown consequences," the source said.

Elaborating the steps taken by the government, another official source said, "The group of ministers (GoMs) have been asked by the PMO to prepare a business continuity plan before announcing the status of the current lockdown scenario. Some key ministers as well as Niti Aayog officials are in regular touch with industry bodies to assess the impact in their respective sectors and taking stock of their financial situation."

India Inc is learnt to have held several rounds of discussions with multiple ministry and Niti Aayog officilas about the fallout of the lockdown.

Industry bodies have given suggestions for a calibrated exit of lockdown and economic measures to cushion its impact.

Chandrajit Banerjee, director general, CII, said, "The government should extend additional support to the people at the bottom of the pyramid through cash transfers. Support to the industry could come through the banking system. Besides, the government should focus on sectors that provide mass employment first, to protect low wage employment and limit the opening of places like malls, restaurants and cinema halls.”