2. Effect of Covid-19
There is no ambiguity about the effects of Covid-19 and the contraction of GDP of not only country but
also the world.
Global economy is facing one of the worst years in the history.
This has caused heightened sense of anxiety among people which will result tremendous upheavals in
the functioning of societies.
A significant chunk of people from lower sections from country may slip back to poverty again, a rare
occurrence for developing nation.
The demographic dividend the India was assured is going to affect adversely due to unemployment.
3. Confidence
It’s quite obvious that the social order is responsible for sound economy.
The foundation of reviving economy is to inject confidence back into the whole ecosystem.
People must fill confident about their lives and livelihoods.
Entrepreneurs must feel confident of reopening and making investments.
The govt. has announced 20 lakh cr package and most of the part was given to the banks to lend to
people. But banks are not willing to do it because of uncertainty and risk associated with this pandemic.
The banks should be injected by confidence so they can lend to people without fear.
Multilateral organizations should have confidence on India so they can lend loans to the Govt.
4. MGNREGA: Saviour
When all the migrant labours returned to the villages it was the MGNREGA which came to rescue to a lot
of these labours.
In the month of June, the demand for MGNREGA jobs has reached 6.2 mn 3 times higher than normal
demand.
Fortuitously, the MGNREGA programme has proved to be a bedrock of support in such times but it is not
enough.
5. Direct Cash Transfers
To revive the confidence in the common section of the people is giving money in the hands of the
people.
But India is perhaps the only largest democracy in the world which is deferring from this tendency. Govt.
has provided the cash transfers through Jan Dhan Bank accounts and kisan nidhi but they are not even
near the satisfactory level.
The think tank have a thought if given such direct cash transfers people will tend not to work in normalcy.
But according to me it is the wrong assessment of the situation.
It is already late now but still the direct cash transfer is the need of time.
6. Need for borrowings
Government finances are already stretched with a major shortfall in revenues. Higher borrowing by the
government is inevitable.
Some economists have suggested the older way of reviving that is printing the currency. But we must be
aware of consequences of it. This should be the last option in front of Govt. when all other options have
exhausted.
With our flawless records of repayments of loans from multinational organizations Govt. should borrow
funds from these organizations especially the International Monetary Fund and The World Bank.
7. Conclusion
India just doesn’t need to look GDP as only factor to recover but uncertainty and insecurity prevalent in
people, firms and institutions are going to be essential.
Restoring confidence among people through direct cash transfers is inevitable at this time.
Restoring confidence among banks to lend people will create boost in the economy.
Without being lured into complacency over illusionary recovery of headline numbers, the path to India’s
sustained economic revival is through the philosophical pursuits of improving confidence and sentiments
of all in our society, using the economic tools of fiscal and monetary policies.
