According to experts, Covid-19 pandemic has hit harder than the financial crisis of 2008-09. During this time, it’s important to take action with effective fiscal packages to take control of the situation & feed the poor/underprivileged. In-fact, the pandemic is striking back & forth through different channels. We are witnessing major supply issues and lakhs of workers trying to get back home.
The unprecedented damages to the global economy is much worse than the 2008-09 financial crisis. Here, the question to ask is what proves that Covid-19 is much worse? Let’s look at the major pointers given below for a fair idea of how much the government is struggling to make good.
Preventive Measures taken by Govt Of India
- The Govt has stood up to offer emergency services to save lives & protecting jobs/incomes of individuals to support families & firms to avoid bankruptcies.
- All major countries are taking significant fiscal measures of more than $8 trillion. Imagine! Though, whenever things bounce back to normalcy, governments will devise a recovery mechanism for the same. Even the Indian Government is making a similar effort.
- This is no more just financial costs. It is also about the countless lives which are being lost every day in every part of the world. And this only looks to be intensifying at an alarming rate. This is greatly impacting the productive capacity of economies & only a fewer people are allowed to work in tandem. So, Government are looking for ways to inject money into essential industries.
- This pandemic is affecting the demand-supply cycle resulting in fewer jobs and meagre income in comparison to the earlier times both locally and globally. In-fact, countries are also adversely affected by contingent global financial conditions and negative capital outflows. This was supposedly a health crisis ending up as a global catastrophe. The falling commodity prices is excessively affected the importers & exporters both. But the Government is doing its best to impose taxes to match the earlier rates.
Also read: Covid-19 Lockdown 3.0 – Do’s & Don’ts
How Govt Supports to Maintain Cash Flow?
Amidst the world health emergency, more & more finances are being awarded for people’s health & prevention measures. This requires over the top spending on hospital services. This is important to support global needs for medical supplies and expert services, emergency funds, etc.
As the virus is contained and people return to work, broad-based fiscal measures become more effective. Depending on access to markets and the availability of fiscal space, such broad-based fiscal stimulus could facilitate the recovery.
The Central Banks are playing an instrumental role to improve monetary accommodation and liquidity facilities thereby pumping circulation in the financial systems. Such liquidity support includes loan guarantees which can reduce potential risks of the economic contraction.
Emergency Lifeline to Support Economy and Health
We’ve reached a situation where prioritizing well-being of people is more important to live by. We would like to understand the 3 basic principles to following during such crisis:
Firstly, lend support to families for access to basic goods and services and live a decent life. Also help potential industries to keep running without layoffs and bankruptcies.
Secondly, all available resources must be put to use in an efficient way & show good fiscal results. This requires great governance & cost-effectiveness.
Thirdly, work around all fiscal risks for appropriate measures and support programs.
What you essentially must remember that Covid 19 is a global crisis & needs comprehensive action throughout the course including to support services to countries with limited medical & infrastructural capacity and fund constraints grants & aid & build an exclusive vaccine to treat it!
Also read: COVID-19: Busting some Myths
