The document discusses the economic impact of the COVID-19 pandemic globally and in India. It notes that the pandemic caused an unprecedented health crisis that turned into an economic and societal crisis. In India, sectors like aviation, tourism, automobiles, and real estate were severely affected, while sectors like internet and telecom benefited. The government and RBI announced fiscal and monetary measures respectively to provide relief. Going forward, restarting economic activity, reviving consumer demand, ensuring liquidity, and greater stimulus measures will be needed to recover from the crisis.

2. Introduction
 Unprecedented in the modern history
 Affected almost every country in the world.
 Came as a shock, Black swan
 , difficult to manage.
 Affected all sectors in the world.
 Supply and demand contraction.
 Affected all segments of the society.
 3.1 mn affected . 220,000 lost their lives.

3. Global outlook

5. Issues
• Health crisis into Economic Crisis
• Economic Crisis into Societal crisis.
• Lives and Livelihoods
• Lock downs
• Loss of Jobs on a grand scale.
• Loss of production
• Substantial reduction in Economic Activity.
• Large loss in Economic Output

6. ILO on Employment/ Jobs
 2 bn workers saw their income reduced by 60%.
 1.6 bn workers , 50% in the informal sector has the risk
of loosing their jobs.
 They lack welfare protection, Access to good
healthcare and can’t work from Home.
 436 mn enterprises facing the risk of becoming sick.

7. Global Response
• Focus on Health Policy, Fiscal Policy, Monetary Policy
and Financing Policy.
• Very fast response to alleviate the pain.
• Announcement of lock downs.
• Large doze of stimulus.
• Money printing in a big way.
• Fast increase of Government debt.
• Using the funds to help Individuals, SMEs, Corporates
and the Financial Sector.

8. Government measures

9. India - The status
 On 29th Apr, 31332 cases.
 7695 cured.
 Out of 739 districts, 300 districts no virus.
 In 300 Disctricts only a few cases.
 129 districts – Hotspots.
 In 7 days – no new cases in 80 districts
 In 14 days – no new cases in 14 days.

11. Containment Initiatives
 Budget for the medical measures.
 Ramping up the medicare capacity.
 21 day national lock down
 Lock down by States
 Travel restrictions.
 Closing educational establishments, gyms, museums,
and theatres.
 Bans on mass gatherings.
 Encouraging firms to promote remote work.
 Increased coordination and communication

12. Indian Economy

19. Issues
 Already the economy was growing slowly. Growth was declining
and Government tax collections were tepid.
 Consumer confidence, Investor confidence and Business
confidence levels were low.
 Many Sectors have become unviable.
 Feb 20 gave a hope in terms of Economy turn around.
 Asset Quality review, Demonetisation, GST , RERA, NBFC crisis
reduced the potential growth rate of economy in stages.
 Banking and Financial services were in bad shape.
 Even before COVID many sectors required Stimulus.
 COVID made the situation worse .
 Unlike in 2008, when our economy was very strong, this time ,
our economy was weak.

20. Issues - contd
 Even before covid, many companies were operating at
less than 70% of the capacity.
 During the lock down, it was a complete shut down
and in the month of April, the activity in many sectors
were less by 90%.
 There was a complete arrest of economic activity.
 Many sectors came to standstill.

21. Sectors affected
 Airlines
 Travel, Accommodation and Tourism
 Automobile
 Real Estate and Construction
 Manufacturing.
 Wholesale and Retail
 Exports

22. Sectors Benefited
 Internet
 Telecom
 Digital Media
 Part of health sector

23. Government Response
 Like other governments , Indian Government was very
fast to come with stimulus measures.
 Specific health budget was created to address the
pandemic.
 Special working groups were set up at the Centre to
monitor the management of the Pandemic.

24. Fiscal measures
 March 26 announced a stimulus package valued at
approximately 0.8 percent of GDP.
 Free food and Cooking Gas.
 Cash transfers to lower-income households.
 Insurance coverage for workers in the healthcare
sector
 Wage support to low-wage workers .
 150 billion rupees (about 0.1 percent of GDP) will
be devoted to health infrastructure, including for
testing facilities for COVID-19

25. Fiscal measures
 Measures to ease the tax compliance burden across a
range of sectors have also been announced, including
postponing some tax-filing and other compliance
deadlines.
 State governments have also announced measures to
support the health and wellbeing of lower-income
households, primarily in the form of direct transfers
(free food rations and cash transfers)
 Aggregate measures amount to 0.2% of GDP

26. Measures by RBI
 On March 27, the Reserve Bank of India (RBI)
reduced the repo and reverse repo rates by 75 and
90 basis points (bps) to 4.4 and 4.0 percent,
respectively, and announced liquidity measures to
the tune of 3.7 trillion Rupees (1.8 percent of GDP)
.
 Allowed companies a three-month moratorium on
loan repayments.
 The implementation of the net stable funding
ratio and the last stage of the phased-in
implementation of the capital conservation buffers
were delayed by six months

27. Measures by RBI
 April 1, the RBI created a facility to help with state
government's short-term liquidity needs, and
relaxed export repatriation limits.
 On April 3, the RBI revised trading hours for
various markets to optimize thin resources and
ensure safety of personnel.
 RBI introduced regulatory measures to promote
credit flows to the retail sector and micro, small,
and medium enterprises (MSMEs) and provided
regulatory forbearance on asset classification of
loans to MSMEs and real estate developers

28. Measures by RBI
 The priority sector classification for bank loans to
NBFCs has been extended for on-lending for FY
2020/21.
 During April 17-20, the RBI reduced the reverse repo
by 25 bps to 3.75 percent, announced: (a) a TLTRO-2.0
for an initial amount of around 0.2 percent of GDP, in
extension of the initial TLTRO program of around 0.4
percent of GDP (funds to be invested in investment
grade bonds, commercial paper, and non-convertible
debentures of NBFCs)

29. Measures by SEBI
 Securities and Exchange Board of India temporarily relaxed
the norms related to debt default on rated instruments.
 Reduced broker fees
 Relaxation in time lines for reporting
 Allowance for moratorium allowed by RBI
 Relaxations for rights issue.
 Several other measures.
 Relaxation to file Q4 results for FY20.
 Relaxation to file FY20 results and quarterly Corporate
Governance Report
 Relaxation for filing shareholding pattern and investor
complaint reports.

30. Other measures.
 Funding NABARD, SIDBI and National Housing
bank.
 Goading banks to lend money to NBFCs and
Businesses.
 Helping migrants to reach their home states / towns.
 Creating a special PM fund for Corona Virus.
 Opening up the central digital library free for all.
 Opening up the projects under MNREGA

31. Need of the hour
 India has managed the crisis well and the world is
surprised how we were able to navigate this crisis
very well
 Restart the Economic Activities
 Gradually opening up the manufacturing.
 Reviving the Consumer demand.
 Ensure the survival of those who are living below
poverty /SMEs and Weak corporates.
 Reduce the unemployment level
 Ensure liquidity in the entire economy.
 Bring more measures to address this situation.

32. Way forward
 At present , the government is the only entity
which has the wherewithal to revive the Economy.
 All other segments of the society are not in a
position to mobilise resources and face their own
problems.
 The resources available today to the government
are not adequate to address the situation.
 At present, it will be difficult to monetise the
assets also.
 Government to identify measures in three
categories. a) no investment required b) with
minimal investments and c) Large investments,

33. Way forward
 Create a new SPV ,which will raise Corona Bonds,
which will be subscribed by RBI, LIC and PSU Banks
with high liquidity ( like SBI). This money could be
utilised to invest in the additional equity of large
Private sector companies and Banks, which require
Capital. When the economy improves, the government
can exit at a very good profit. This strategy was
followed by US in the last crisis.

34. Way forward
 The SPV also could buy all the instruments which are
rated BB and above from the market to create liquidity.
Apart from instruments from Banks, NBFCs,
instruments from Mutual funds, Insurance, Pension
and Corporates could also be looked at.

35. Way forward
 Government and Government employees are one
of the major consuming class in the society. There
are more than 3 crore under Central Government,
Defence, PSUs, PSBs and Pensioners. There are
also local government employees. Tax/ Interest
concession could be given to them for buying
Vehicles, Consumer Durables and Homes. They
could be encouraged to utilise the LTC to support
tourism and travel. Already, PSU banks announced
reduction in interest for their employees to buy
Homes, Consumer durables and Vehicles. Similar
concessions could be given for all the government
employees and PSU employees.

36. Way forward
 Government, Government Departments and PSUs are
large buyers of equipments, machineries’, IT and
communication products. Due to budget constraints,
government has moved away from outright of
purchase of products to leasing and hire purchase of
these products. The Government departments instead
of leasing the equipments, machineries and services,
they could buy them outright in large numbers.

37. Way forward
 There is a perception that PSUs in India are not
efficient compared to Private sector. In many sectors
PSUs have better operating metrix compared to private
sector. They also have large cash balances and good
balance sheets. The strong PSUs can be requested to
draw up large capex programmes to be implemented
within India.

38. Way forward
 Due to budget constraints, the governments at both
central and state level take lot of time to settle the bills
of suppliers. Since the crisis has aggravated the issue of
liquidity, the Governments and Government
departments could settle the dues to all the pending
private companies within 30 days.

39. Way forward
 Covid crisis brought out two major dimensions. Lives and
livelihoods. There is a need to save lives of people but at the
same time, the containment measures adopted should not
result in loss of jobs, loss in income and loss of lives. The
loss of lives due to containment measures could become
more compared to loss of lives due to the disease itself.
There is a need to protect the employment and the sectors
which employ large number of employees , like
transportation, travel, tourism, Auto, Real Estate and SMEs
should be given a special focus and specific measures have
to be announced to protect these sectors

40. Way forward
 Ease of investments. Sectors across the country
faced many issues in keep their competitiveness in
tact. There were many new regulations
implemented at regular intervals, which have
affected the competitiveness of industries. For a
period of two years, the regulation relating to
conduct of business could be simplified, which will
not cost much. The rules could be simplified to
start a new business, take over a business and
flexibility in the profile of equity investors in a
company.

41. Way forward
 Economic growth will be very important to
overcome the crisis. By focussing on Industry and
Economy growth, government would be able to
kick start the economy and the aggregate demand
will rise. The higher industry and economic
growth will lead to higher tax collections .
 In the present scenario, to achieve positive
economic growth this year, the governments at
both centre and states have to spend more than
what is spent in normal circumstances.

42. Way forward
 All the major governments in the world have come
with big budget to address this issue. Apart from the
local resources, they were also mobilising resources
from Institutions like IMF, World Bank and ADB.
 New money has to be printed in a big way , it is called
Modern Monetary theory. An additional Rs.14 Lakh of
stimulus would be required to achieve the economic
growth.

43. Way forward
 The funds from IMF / World Bank / ADB are available
for long term at very concessional rates. The scope for
availing these funds to address the stimulus could be
considered. The major strategy could be to raise funds
locally for all the stimulus measures , which will
reduce the foreign currency risk. For borrowings from
abroad, part of the dollar reserves could be utilised.

44. Conclusion
 Considering the fact that India has a very strong
domestic Economy, the above mentioned measures
will boost the Consumer confidence, Business
confidence, Investor confidence resulting in higher
productive activities in the Economy , higher
consumption, higher investments , leading to higher
GDP growth, Higher Tax collections and better
government finances in the medium term.
 .