To mitigate the impact of much ferocious second Covid wave, Centre should support the household sector directly, Motilal Oswal Financial Services Ltd (MOFSL) said in a study.
Accordingly, the report suggested that Centre should provide direct income support or transfer to casual workers in the construction and MSME sectors.
It cited that without a strong household sector, the Indian economy may find it difficult to achieve a strong revival on a durable basis in a post-Covid era.
“Our study clearly reveals that due to extremely low fiscal support in India, the income losses for the private sector (especially households) were much higher compared to other major nations in our study,” the study said.
“In comparison to other major nations, as much as 80 per cent of income losses in India occurred in the private sector, while only 20 per cent losses suffered by the government.”
In contrast, governments in nine other economies covered in MOSFL’s study incurred losses anywhere between 40 and 180 per cent.
“Going forward, as the government sector in all countries, including India, will be taking a step back (only gradually) as Covid-19 subsides, the burden of stronger growth will fall entirely on the private sector.”
“With India’s private sector bearing such a large share of income losses in CY20, we are skeptical of a strong rebound in growth, as and when it happens.”
Lately, India reported record daily increases in coronavirus infections, prompting new lockdowns and restrictive measures to curb the spread of the pandemic.
The exponential rise in new coronavirus cases in India has been termed as a humanitarian crisis.
It also raises concerns about the country’s economic recovery.
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