Inflation could get in the way of our economic recovery this year
SummaryLet’s loosen our fiscal reins to support a revival that faces significant price-rise and pandemic risks
India’s second wave of the covid pandemic is turning far more serious than imagined. New infections of coronavirus have now crossed 300,000 per day, with daily deaths above 2,000. Clearly, the human cost and burden on our health infrastructure this time is far more grave than during the peak of last year’s wave. However, unlike 2020, when the central government imposed a draconian lockdown for more than two months, this time the government has shied away from imposing a full lockdown. Even though state governments have imposed their own versions, these are less severe and restrictive than the national lockdown last year. With Prime Minister Narendra Modi making it clear that a national lockdown is unlikely to be an option, given its potential impact on the economy, in particular on lives and livelihoods, the economic damage may be less severe than last year.