<p>To best answer this question, one must consider the possible answers under the following</p>

<p>criteria:</p>

<p>1. How significantly has the COVID-19 impacted the Indian economy?</p>

<p>2. What policies have the government implemented in the short-run to maximise recovery?</p>

<p>3. What investments must the government devote more resources to, to ensure long-term</p>

<p>economic growth and recovery?</p>

<p>The COVID-19 pandemic exceeds its role of being a global, catastrophic health crisis to</p>

<p>demolishing the economy to its core, sector-by-sector. This pandemic has not only created a</p>

<p>severe demand-deficiency in the Indian economy but is also a critical supply shock.</p>

<p>Economic uncertainty has grappled with consumer spending and business confidence levels -</p>

<p>delaying their consumption expenditure and investments. Amongst the worst-hit industries</p>

<p>include automobile, realty, financials and retails, which malignantly create a recessionary,</p>

<p>negative multiplier effect on the remaining sectors of the economy too. As private firms strive to</p>

<p>cover their costs of decreasing demand, workers are made redundant. Consequently,</p>

<p>household incomes are constantly decreasing; India is estimated to have lost USD 4.5 billion</p>

<p>everyday it remains shut. It is, thus, justified that the informal sector, accounting for 80% of</p>

<p>employment positions in India, is the most-affected. The lockdown constraints have caused</p>

<p>firms to operate on a work-from-home basis, hence, inflexibilities in the informal sector labour</p>

<p>market have made it increasingly difficult for workers to adapt to technological change in the</p>

<p>short-run. Those on the breadline of absolute poverty are more susceptible to contract the virus</p>

<p>due to unhygienic living conditions, thus, struggle to derive a treatment. Each of the</p>

<p>government&rsquo;s 5 macroeconomic aims have been adversely-affected: price instability, lower</p>

<p>economic growth, higher unemployment, unstable BOP and greater income inequalities.</p>

<p>To aim for maximum recovery from the devastating economic impacts of the COVID-19, the</p>

<p>government must acknowledge policies boosting both- the aggregate demand and supply of the</p>

<p>economy. This can be broken down into two categories - long-run and short-run policies.</p>

<p>In the short-run, the government should target at implementing demand-side policies stimuli.</p>

<p>On the expansionary monetary end, the Indian economy witnessed a significant plummet in its</p>

<p>repurchase rate to 4.4% in the first quarter of 2020. Through this decree, the central bank</p>

<p>encouraged private firms to borrow funds at a cheaper rate for investments. Several liquidity</p>

<p>injections were consecutively implemented to increase the economy&rsquo;s money supply. These</p>

<p>included a lower CRR, easier availability of overdrafts, temporary moratoriums of interest on</p>

<p>working capital facilities and many more. An increased money supply should boost the</p>

<p>aggregate demand in the economy and enable firms to sustain their ventures.</p>

<p>On the fiscal side, the Finance Minister announced the implementation of a stimulus package of</p>

<p>more than INR 11 lakh crores. This package included an increased government spending on the</p>

<p>MSME sector, which witnessed a drastic negative impact due to inadequate access to finance,</p>

<p>poor infrastructure and inflexibilities in labour markets. The package also included financial relief</p>

<p>to low-income groups and farmers. The government, in addition, increased its spending on</p>

<p>provisions of affordable housing for migrant rural workers. While this policy was</p>

<p>budget-constrained by the Indian government, it really helped in healing the COVID-19 damage</p>

<p>on the less-affluent sections of the economy and reducing the income inequality.</p>

<p>While these policies prove to alleviate the economy in the short-run, the government must</p>

<p>initiate long-run supply-side policies to ensure that the economy recuperates completely and is</p>

<p>able to tackle a similar catastrophe in the future.</p>

<p>Firstly, the government must invest in the provision of more efficient, qualified healthcare</p>

<p>services. It is important to devote enough resources to Research and Development of modern</p>

<p>vaccinations and mass treatments to ensure that the quality of human capital is not</p>

<p>compromised. Healthcare promises a productivity boost by the young workforce since they are</p>

<p>less likely to terminate employment due to sickness.</p>

<p>Secondly, it is important to bring about a technological shift in the economy. R&amp;D in technology</p>

<p>has massive positive externalities, especially as the global economy battles COVID-19.</p>

<p>Technologically-apt workers can easily adapt to the new work-from-home employment</p>

<p>opportunities without being made redundant. Technology allows firms to connect to a larger</p>

<p>customer-base globally and locally. Thus, while lockdown constricts business operations, firms</p>

<p>can respond to consumer demand through online portals. This could also benefit workers from</p>

<p>the unorganized sector as they can get admitted to an online platform to sell their services to a</p>

<p>broader market. For example, cleaners booked through an online portal, Urban-Clap India, are</p>

<p>still able to supply their services to households, whilst maintaining appropriate sanitization and</p>

<p>social distancing at their arrival.</p>

<p>In the light of these drawn conclusions, it can be deduced that closely analysing the influence of</p>

<p>COVID-19 crisis on social communities, sectors and economies is crucial to assess the rate of</p>

<p>recovery and the possible solutions, whilst ensuring nobody is left apart in these efforts. That</p>

<p>said, the Indian economy is in a severe need of implementing the above policies to pave a</p>

<p>roadmap to its recovery.</p>
