Economic slowdown created due to the outbreak of COVID-19 is expected to last longer. Not weeks, but possibly years, and certainly months, said Principal Economic Adviser Sanjeev Sanyal to the members of the PHD Chamber of Commerce and Industry via a video-conference call.
The process of unraveling the lockdown imposed to restrict the spread COVID-19 has already begun, and most sectors of the economy will be operational by May 3, he added.
“Well before the rest of the world is out and about, the Indian economy will be open,” he said. International passenger travel, however, would be locked down for a long time. “I think it will be months, not weeks, as much of the world remains unsafe,” he said.
In terms of the economic stimulus, Sanyal encouraged industry leaders to analyse the process as “a marathon, not a sprint.” He also warned that the economic depression is expected to last a longer. “Not weeks, but possibly years, and certainly months,” he said.
So the centre is also expected to get stronger to support in incremental doses, rather than spend all its resources in one go.
Besides, Sanyal acknowledged that several countries have announced huge stimulus packages, running into trillions of dollars, even before announcing shutdown measures for preventing the spread of the infection. However, most of these countries have wasted their money on big announcements and felt the Indian approach of first announcing the lockdown, and then taking adjusted their measures to protect and revitalize the economy.
“International investors are impressed by what we are trying to do…We should not at all be apologetic about this approach,” he said.
The steps announced by the Union Finance Ministry and the Reserve Bank of India so far were only directed to “cushion the blow” so that the economy remains operational and active amid the nationwide lockdown, so that limited resources could be protected for the rebuilding phase. “Our first few efforts are to make sure you have enough working capital to keep yourself alive through this shock,” said Sanyal. A larger package was in development and would be announced “sooner rather than later.”
“Of course, we are not going to solve poverty by giving Rs 500… But we are just cushioning the hit, so that everyone has some money and some food,” he said.
“We must remember that the world on the other side of this crisis will be very different,” he said.
“This is not the end of the world… India should see it as an opportunity not just to rebuild ourselves, but also participate in the rebuilding of this new world,” he said.