The COVID-19 public health emergency has led to an unprecedented, months’ long lockdown of 1.3 billion citizens, which has displaced millions of migrant workers, put the economy under severe stress and stretched administrative capacity.
In response, the Government of India has announced a special economic and comprehensive package sized at 10 percent of GDP, which includes interventions for immediate relief, liquidity, and payment deferrals. However, despite the right intentions, implementing these measures will not be easy. Financial aid to micro, small, and medium enterprises (MSMEs) would not be effectively distributed because of challenges with identifying and targeting those most in need. The challenge of millions of contract labourers and daily wage workers losing their livelihoods raises systemic choices: Will they return to the cities and, if not, what kinds of gainful employment could they find in the villages? The persisting need for social distancing and sanitisation directives will continue to disrupt supply chains, impede cash flow and cash recoveries, and make it difficult for businesses to resume normal operations.
This paper discusses India's effort to balance containing the COVID-19 pandemic and saving lives while also preserving businesses and livelihoods. It also proposes several recommendations related to monetary policy; MSMEs; food, water, and energy security; emergency response and disaster management; decarbonisation; and green infrastructure.