10/15/2020: India’s COVID-19 Challenge: Outcomes and Options

This is the second forum in the “Envisioning India” Series organized by IIEP Director James Foster and Distinguished Visiting Scholar Ajay Chhibber. The series is co-sponsored by the Institute for International Economic Policy.

India has been hit hard by the Coronavirus. Today it has amongst the highest number of cases worldwide and daily rising death rates. One of the world’s strictest lockdowns in March, with no warning, flattened the economy instead of flattening the COVID-19 curve. In Q1 FY 2020-21 (April to June), India’s GDP fell by almost 24%, while the FY 2020-21 GDP growth is projected to be between -5% and -10%, amongst the largest drop globally. The economy was already ailing prior to COVID-19, with growth falling for 7 previous quarters. COVID-19 will set it back further, perhaps by at least 5 years, and push millions out of work and into poverty. India’s ambitious goal of becoming a $5 Trillion economy by 2025 seems a distant dream now.

The lockdown also forced millions of urban migrants to return to their rural homes, under great hardship, carrying with them the virus and the despair of joblessness. India’s woefully inadequate public health system is now overwhelmed. Central and State finances are in deep trouble and the GST (as a sign of Cooperative Federalism) is beset with intense political friction. The already struggling financial system is likely to sink even deeper into the mire. The Rs 20 Trillion (10% of GDP) package announced by the government with much fanfare, under the Atma Nirbhar Bharat Abhiyan (Self-reliant India scheme), is too small – especially its fiscal component – to repair the economic damage or revive livelihoods. The package includes a series of reforms in agricultural markets and labor markets as well as a greater push for “Make in India.” But will these reforms help India at this stage?

India is between a rock and a hard place. Did it have to get so bad? Is there any good news? A silver lining anywhere? Is there scope for some transformative change? Or do we, as with the virus, have to brace ourselves to “live with” this economic downturn for a long stretch ahead?

Our distinguished panelists, Bina Agarwal (University of Manchester) and Raghuram Rajan (University of Chicago), will discuss these challenges and possible options and solutions.

This event is on the record and open to the public.