Economy

Think of a main battle tank coming at you. Firing a pistol won’t help. The right weapon is an anti-tank rocket.” USbased Alok Jagdhari, co-founder of angel investing platform 92angels LLC, cites the analogy to illustrate the need for a big and concerted financial package to revive economies held to ransom by the coronavirus pandemic across the world. Jagdhari has prepared a pandemic survival guide for clients to show the magnitude of the problem and macroeconomic response of various countries. India is missing from the list of countries that have earmarked between 5 per cent and 30 per cent of GDP for the purpose.

“Go big or go bankrupt,” says Jagdhari. “Releasing things in dribs and drabs won’t work. Addressing MSMEs (small industries) but not other sectors won’t work.” He adds that India should earmark at least 5 per cent of its GDP (₹10 lakh crore) to begin with to support the health of its citizens and the economy. And it should be done quickly. “With each passing day, the problem will become exponentially worse. It won't go from 5 per cent of GDP to 5.1 per cent of GDP in a week, but more like 5.5 per cent of GDP,” he says. "If things are not arrested at this point, a number of enterprises will simply fold up. They won’t be left alive to come back after a few more weeks."

As every country fights its own battle against the virus and brings together here varies from ₹6 lakh crore to ₹30 lakh crore, and anything in between, and ‘as much as is needed’. “This is an unusual crisis. It is large, sudden and global. We don’t know a lot of medical parameters, and hence its impact. So, this is not a time anyone can say anything with precision,” says Arvind Subramanian, India’s former Chief Economic Advisor (CEA), explaining the complexity of the problem.