The gross domestic product (GDP) growth for the April-June quarter contracted 23.9 percent against a growth of 5.2 percent in the same period last fiscal.
To tide over the economic fallout of the pandemic and subsequent lockdown, the government in May announced a nearly Rs 21 lakh crore stimulus package.
Even before the pandemic struck, the Indian economy was experiencing a slowdown as it grew at 4.2 percent in FY20.
Most of the announcements made so far, attempt at restarting the economy with reforms on the supply side. The relief package provided immediate relief in the form of tax deferrals, cash transfers for the poor, and regulatory forbearance.
Frequently Asked Questions
A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.
There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.
Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.
As part of the package, the government also announced credit guarantees for micro, small and medium enterprises (MSMEs), transfer of foodgrain to the poor, regulatory changes to prevent bankruptcies, among others.
A supply-side intervention attempts to clear supply-side bottlenecks in the economy to generate demand. However, a demand-side seeks to revive demand by generating economic activity.
With the economy now officially entering contraction, the focus should now be to revive growth. Experts believe that greater capital expenditure has a higher multiplier effect.
The focus of the government now would have to be on higher public investments in infrastructure, which would allow global supply chains to invest more. Announcement of new projects, increased construction activity, timely payment, and initiation of fresh projects are some of the ways in which demand could be generated in the economy.Former NITI Aayog Vice-Chairman Arvind Panagariya stated on August 8 that the nation is going to possibly require 'a little bit of stimulus' on the demand side as the country's economic activity begins to expand.