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Are we looking at the new economy and world post Lockdown

As of now, the Coronavirus has already disrupted the equilibrium of the global economy and society at large. No aspect of the two has left untouched with the impact of Coronavirus. The consequences it carries are still uncertain. As per the Policy, Research and Statistics Department, UNIDO, the UN has developed the uncertainty Index after studying the data from the Economist Intelligence Unit. The index measured how many times did the word “Uncertainty” has been used in connection with the terms ‘pandemic’ or ‘epidemic’ in country reports. The study reveals that the coronavirus is associated with the highest level of uncertainty beating all previous disasters like SARS, Ebola, Swine Flu, etc. in the economic context since the index started recording data. Now we are looking at a different world. The economy that rebooted itself after the shock of the 1930s great depression might move towards the recession that never happened after 1930. The International Monetary Fund has reassessed the prospect for growth for 2020 and 2021, declaring that we have entered a recession – as bad as or worse than in 2009.

The current state of affairs demands an urgent response decisively, innovatively, and together to suppress the spread of the virus and address the socio-economic devastation that COVID-19 is causing in all regions of the country and abroad. This first response should be the vaccine of the virus. It is expected that any country that successfully developed the vaccine immediately assist other countries to stop the spread.

The Reopening of Economy

If we take a closer look we may get a glimpse of the near future. The global supply chains are jammed, wages got stuck and so do demand, productivity is at a halt. However, India is trying to gain momentum quickly. The government is taking all important steps to make sure that Lockdown and the economy can go hand in hand for some time until we gain control of the spread of Covid-19. The near future post lockdown comes with great challenges which any economy of the world. The reopening of the economy will be slow and gradual. Businesses that rely on large gatherings of people will be the last to recover. Several countries have outlined their plans and India is also working on similar lines. A few basics are:

1) Small businesses and schools will reopen in the least hard-hit areas.

2) Social distancing protocols and mask-wearing to remain compulsory in coming days

3) Large gatherings might still be prohibited even as the economy gradually re-opens

4) Restaurants, cinema halls, hotels, malls, fun parks, and similar businesses having large gathering would be the last one to open

5) Manufacturing is to be the focus to reboot the economy

6) Consumers are in the money-saving mode, hence bringing the money back in the market need some stimulus from the government

India has already committed $23 billion, close to 1% of the GDP, to support the societal structure in the form of health insurance for health workers, cash transfers, free food, and gas distribution. It is expected that looking at the extent and impact of support other countries have provided, the second larger stimulus must be in the pipeline of government that can give a necessary boost to the economy. The prime focus should be the SMEs, MSMEs, and the agriculture sector.