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India in Lockdown 4.0

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Among all the developments that have occurred in India in recent months, those that took place on May 12, 2020 deserve a special mention. On that day, Prime Minister Narendra Modi told the nation that the lockdown would be extended yet again (from May 18 to 31) in light of the continuing spread of SARS COV-2. The same day, he also announced a stimulus package to provide relief to all those who have been suffering because of the restrictive measures taken to contain the Coronavirus pandemic. In addition, Narendra Modi indicated that India would undertake structural economic reforms that have been under discussion for quite some time now.

The government help amounts to an enormous sum of $270 billion, which will be made available in four tranches. The money accounts for approximately 10% of the nation’s annual GDP and about 80% of the recently approved Union Budget of India. The country’s financial year starts on April 1 of each year and ends on March 31 of the following year.

It is worth pointing out that the budget for 2020-2021, which was passed by Lok Sabha (the Parliament of India) at the end of March, had been prepared as far back as the end of January. And at the time, absolutely no one could have predicted the dire economic consequences of the SARS COV-2 pandemic for all the nations without exceptions. In fact, the World Health Organization called COVID-19 a global pandemic almost a month after India’s annual budget for 2020-2021 had been compiled.

And during the approval process at the end of March, it became apparent that changes would have to be made to the budget because of the worsening epidemiological situation in the country and the need to resolve problems stemming from it. Again it is worth reiterating that none of these issues had been anticipated at the beginning of the year.

Towards the end of April, i.e. at the end of the 2nd stage of the nation-wide lockdown declared on March 25 (initially meant to last for 3 weeks), the situation in the country took a serious turn for the worse. Since India implemented one of the toughest lockdowns in the world during the first and second stages, such actions essentially paralyzed the economy on every level and led to clearly negative consequences for individuals as well as various legal entities, especially medium-sized businesses, in India. And the first tranches of Narendra Modi’s........

© New Eastern Outlook