Covid-19 has continued to rattle the lives and livelihoods of the population around the world. Countries implement different formats of lock downs- from complete curfew like lockdown to lock down with partial relaxation. The economic downturn due to pandemic has severely jolted the policy decision making capacity of the governments as such situation procreates a severe dynamic uncertainty for the agents of the economy.

In India, when lockdown was initially started in March, economic issues were almost forgotten as containment of covid-19 was the only agenda of the government. But it is almost unsustainable to not address the economic issues in a country like India as livelihood comes first before life. However, healthy worker is required to contribute for the sustainable livelihoods. Therefore, Indian government has rightly extended the lockdown with some form of relaxation for the industries to resume the production and other business operations.

But the moot question is for whom the industry to produce and provide services? The driving force for the industry lies in the hands of the urban consumers to a large extent. The urban consumers buy more non-food than food. Even in food sector, the bulk of the purchased food comes from the urban consumers.

Due to less than optimal functioning of the food supply chain, even the consumers are unable to get a variety of foods-which is required to maintain the diet diversity.

Regarding non-food purchase, the industry expects a ‘revenge purchase’ (consumers who are likely to indulge in revenge buying to make up for not being able to purchase during the lockdown).

Reverse migration of the workers has shifted the focus of the containment of the covid-19 from urban to rural area. Along with issues related to lives of the population, the livelihood will also be affected as wages of rural labour will be moving down ward.

The disposable income of the households in organised sector is going to be affected due to decisions of the governments (centre and state) for increasing the cost of petrol, diesel by increasing the excise duty and VAT respectively, freezing dearness allowances etc. under the state of uncertainty, the consumer in general will  be very  cautious about the purchasing decision. 

As per an estimate of UN, the GDP growth rate of India is slashed to 1.2 percent for the year 2020-21. To stimulate the Indian economy, Government of India has declared a Rs.20 lakh crore package to stimulate the economy.

 It is really welcome to find a few major policy decisions related to land, labour, liquidity and law and a major component of these policies is supply driven which will incentivise the producer to invest. A noteworthy declaration was related to allocation of Rs. 40,000 crore to the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) over and above the budgetary allocation of Rs 61,500 crore.

This will certainly address the livelihood needs of the unemployed migrant laborers. However, this is not sufficient to revive demand immediately. Second, the success of the programme depends on the design for implementation which may take time.

But, to help revive the economy, the consumers need immediate income at least for next three months to spend on the goods produced and services rendered by industries. Therefore, immediately, a revised income transfer scheme should be declared for  the poor, unemployed, self-employed, migrant labourers and employees laid-off due to lockdown.

As a policy decision, the government should not increase the cost of the product or services by increasing duties or cess during the period of lockdown. The government should meet the expenditure by resorting to deficit financing with the support of Reserve Bank of India (RBI). In order to revive and expand the economy, it is high time to lift the morale of the consumers by incentivising them to consume as they actually drive the economy forward.

(Dr Bhabani Prasad Mahapatra is Assistant Professor at Xavier Institute of Social Service, Ranchi.)