India was rated low in public heath care and sanitation even before but the pandemics has thrown a special challenge. Out of the more than 1000 odd cases the deaths reported are around 30 which means the virus is contained with self health resistance. The countries developing high mortality had much better public health care but by the time problem was understood the company contacts infection reached to high level. The lock down period of 21 days was considered to have a control on the spread under some assumption. But as the migrant workers got into the panic and social distancing was disturbed it is to be seen how many of them have developed Covid. But now the movement has been brought under control. The government has announced relief package of roughly 1.70 lacs crores and RBI has also loosened the credit flow of significant amount. The private sector and individuals are also contributing. Even though the confirmed cases are likely to recede till the lockdown is about to be over but the virus going out of scene for quite sometime more is not to be accepted with high degree of reliability. The fear of contracting will remain psychologically and the aversion in crowded area shall remain for long time. India being consumption economy the manufacturing sector somehow would comeback to full operation but so far as the service sector is concerned the functioning would be as not as normal as it was required to be. Secondly tourism, travel and hospitality are not going to resume to full extent. The weather conditions can also play their role in reducing the impact. The fiscal condition of the government was not very comforting we earlier and health of thr corporate sector was not so good, there will be the pressure on the government to do something more for casual workers and spend on hygiene, sanitation and other aids which need another Rs. 1.70 lacs crores as the situation warrants. Since the productivity going to fall from here the capacity utilisation would depend upon as to much it would be easy to take loan the fall in income and fiscal spending would work to maintain the text book relationship between growth and inflation. Though foreign investment may be resuming as the central banks are pumping money into the system, unless spike in growth does not take place the index from where it had fallen will not be the same for one full year. About 20 percent of the economic activity would remain staggering and it would include fresh investment and cut in consumption more than the government spending in all situation GDP is likely to be cut by at least 200 bps. This is not to include the loss in employment which would be alarming. By next August as the vaccine would start coming full blown consumption would be possible.
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