The government may announce a stimulus package to ensure that the resurgence of Covid-19 does not derail the economic recovery. The package could provide relief to the poor if the second wave of the pandemic disrupts their livelihood, three people familiar with the thinking in the government said on Wednesday.
Impact of the second Wave on the economy
Sources reveal Finance minister interacted with other ministries and industry representatives to come up with a series of reliefs to the affected sectors. DK Srivastava, chief policy adviser of EY India said,” This second wave in India has appeared with a vengeance. Its impact on the economy is likely to be very severe.” He further said,” At present, the expectation is that as the coverage of the vaccinated population increases, the incidence of Covid can be brought under control, perhaps within the first quarter of FY22.” Sanjay Aggarwal, president at PHD Chamber of Commerce and Industry demanded a sector-specific stimulus to facilitate the growth of the industries still grappling to recover from the first wave of the pandemic.
Vaccination Strategy upliftment
The Finance department of the country announces to control the second wave of the pandemic through its test-track-treat-vaccinate strategy.
Covid-19-appropriate behavior and local-level containment would be achieved without going in for hard and widespread lockdowns said Finance Minister. Experts say that economic risk mitigation would depend on the government’s vaccination strategy.
TPT Policy Advocacy and Recommendations
- No significant change in the economy was witnessed after the government announced its first economic stimulus to combat the financial crisis during the first wave. Start-ups and small-scale business owners haven’t reported any noteworthy benefits from the relief. Moreover, analyses of the market have revealed a need for balance in supply and demand and not monetary support.
- Instead of releasing a boastful amount to ascend the crashing economy, the government should urgently implement specific support measures for businesses affected by the pandemic like offering tax exemptions/reductions or extending tax payment deadlines. The government should approach the local manufacturers for large-scale purchases and upscale their finances. Commercial banks should continue to offer moratoriums, extend tax payment deadlines, reduce lending interest rates, raise credit limits and restructure loans for businesses in fields heavily affected by Covid-19. A multisectoral exemption of taxes and charges should be implemented to leverage the crashing scores.