Government Policies During Lockdown: Indian vs. International Perspective

Government Policies During Lockdown: Indian vs. International Perspective

Pallavi Sood (Chitkara University, India), Meenakshi Malhotra (Dr. V. N. Bedekar Institute of Management Studies, India) and Shivinder Nijjer (Chitkara University, India)
DOI: 10.4018/978-1-7998-7495-9.ch002
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Abstract

The COVID-19 pandemic has had severe consequences for economies across the globe, leading the governments to resort to extreme strategies such as implementing lockdowns to contain the reach of a virus, to implementing recovery plans in order to ensure business continuity and allow the smooth running of the business. This chapter highlights the economic impact of the COVID-19 pandemic globally and in India. It also outlines the various government measures taken at national and international levels for reopening of the economy, primarily focusing on policies in the services sector (including healthcare, education, travel, and tourism), in the manufacturing sector (MSME, infrastructure, power, utilities, and energy), and related to fiscal measures (overall, employment and monetary, and macro). The chapter concludes by summarizing the implications for India to combat adversities created by COVID-19, primarily by bringing improvements in the goods and services sector.
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Introduction

During the early 20th century, a pandemic of Influenza engulfed the globe costing millions of people their lives. Till Dec 2019, no one ever imagined that a similar pandemic was going to visit the global comity of nations again and take a toll on human lives at similar scale. As the novel Coronavirus (COVID-19) spread rapidly across the globe, the countries and their economies were left with no other choice but to lockdown all the sectors. Suffering has been in equal measure for both the developed and developing countries (Reiner, Barber, & Collins, 2020). Amongst all this alarming muddle of economics, finance, sustenance and survival paranoia, people all across the world suffered colossally. Countless people lost their jobs and had no choice but to depend on social handouts and government aid to get basic necessities each day. There were some heartbreaking visuals of people marching on foot in India, for a never-ending journey to reach their homes in faraway states. Many flew out of the countries where they were working and headed back home, only to find themselves in a dire strait. Apart from the sectors like finance, industry, agriculture and services, corona virus steadily swept its way around all the major sectors and its impact was more than visible all across the globe (Dev & Sengupta,2020).

The first case in India was confirmed on 30 January 2020 in the state of Kerala, when a university student from Wuhan, China travelled back. As the number of confirmed COVID-19 positive cases closed to 500, the Government of India imposed a curfew on 22 March (Lancet,2020). Following this, on 24th March, a nationwide lockdown for 21 days was imposed to break the transmission chain. Same was further extended till the end of May, but with some relaxations. With the ongoing turmoil, all the sectors were badly hit as people had no choice but to shut down every activity and stay at their homes (Ghosh, Nundy, & Mallick,2020).

Given the extraordinary nature of the crisis, fiscal and monetary policymakers globally, worked diligently throughout hoping for a hope for a strong global rebound. After some time though, it became clear that the pandemic was far more economically destructive than any of the past economic situations. It was fairly certain that recovery could take much longer than expected. In the meantime, many world powers are moving mountains to prop up their economies during the Coronavirus downturn. For example, China’s leadership seemed less inclined to spearhead a global economic recovery this time than it did following the 2008 financial crisis. Overall, gross domestic product (GDP) dipped almost 7 percent in the first quarter, China’s first economic contraction in more than forty years (Azman, & Luquero, 2020). The pandemic paralyzed the British economy just as its leaders were negotiating a post-Brexit relationship with the European Union. The Bank of England dropped its benchmark interest rate to 0.5 percent, a record low, and loosened capital requirements for banks (Oaili & Arun, 2020). In a sign of the staggering toll the virus was taking on the U.S. economy, more than thirty million Americans—about one in six U.S. workers—have filed for unemployment since mid-March. Economic output plunged by nearly 5 percent in the first three months of 2020, the steepest dive since 2008(Sharif, Aloui, & Yarovaya, 2020).

The COVID-19 crisis devastated people’s lives, jobs, and businesses. Governments took forceful measures to cushion the blow, debt totaling a staggering $12 trillion globally (Ghosh, Nundy, & Mallick,2020). While the ratio of general government gross debt to GDP was reported in the range of 60 to 80 percent for advanced economies like European regions and US, it was the lowest for China and other developing countries (McCormick, Torres, Benhamou, & Pogkas, 2021). Though this saved many livelihoods, the cost put together with the sharp fall in tax revenues have pushed global public debt to an all-time high of close to 100 percent of GDP. With many workers still unemployed, small businesses struggling, and 80-90 million people likely to fall into extreme poverty in 2020 as a result of the pandemic (Bretas &Alon,2020).

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