Up to 135 million jobs could be lost, and 120 million people could be pushed back into poverty in India, all of which will reduce consumer income, spending and savings, according to a new report by international management consulting firm Arthur D Little.
In a report titled “ India: Surmounting the economic challenges posed by Covid-19: A 10 point programme to revive and power India’s post-Covid economy” , the consulting firm said that India is headed towards a W-shaped economic recovery with a potential GDP contraction of 10.8 per cent in FY21.
"An opportunity loss of $1 trillion is staring India in its face. For its $ 5 trillion vision, a radical economic approach is needed, centred on an immediate stimulus and structural reforms. The Prime Minister’s visionary Atma Nirbhar Bharat Abhiyan is a good start to this new approach.” said Barnik Chitran Maitra, lead author of the report and Managing Partner & CEO of Arthur D Little, India and South Asia.
India reported its first Covid-19 case on 29 January 2020, a medical student studying in Wuhan who had returned to Kerala on 24 January. Since 25 March 2020, India has been on a national lockdown with a few relaxations since 3 May 2020. As of 10 May 2020, India had reported over 65,000 cases and more than 2,000 deaths.
According to the report, the worst of Covid-19’s impact will be felt by India’s most vulnerable in terms of job loss, poverty increase and reduced per-capita income, all of which will be reflected in a steep decline in GDP.
“The government recovery programme needs to provide a comprehensive safety net for vulnerable sections and support micro, small and medium enterprises. Clear policy announcements, comprehensive safety nets and decentralized systems of governance will be essential to not only flatten the curve, but also reverse the economic trajectory” said Ashwini Deshpande, Professor of Economics at Ashoka and Director of Centre for Economic Data and Analysis (CEDA), and one of the co-authors of a counterpoint included in the report.
The report proposes a 10-point programme requiring a $280 billion of spending and investment measures which should be supported by policy reforms, and proportionate monetary and liquidity measures to secure a sustainable economic future for 1.3 billion Indians.