Policy note by Suraj Jaiswal, Ashutosh Verma - CBGA (India)
Covid-19 started as a health crisis. However, the contagious nature of the virus soon transformed it into a social and economic crisis as well. The disruption caused is unprecedented in many ways. Firstly, the global nature and the speed with which the pandemic spread does not have any precedent in recent history. Secondly, the methods adopted to control the pandemic, most notably social (physical) distancing, and restriction on social /economic activities also have no parallel in human history on this global scale. The impact of this, caused in part by peoples’ own unwillingness to engage in economic activities that are not absolutely essential, such as tourism and entertainment, and in part due to the restrictions imposed by governments, has been a severe economic crisis. This crisis has led to a largescale gross domestic product (GDP) decline, mass unemployment, displacement of labour, and pressure on businesses, among other things. According to one report¹, England has not seen an economic crisis of this magnitude in the last three centuries. In India, certainly, this is the biggest economic crisis since independence. And, while the severity of the economic crisis varies across countries, no country has remained unaffected.
The severity of this health and economic crisis requires a proportionate response from governments. And governments across the world did react to this crisis through large fiscal responses. Broadly, government responses can be put into two categories: those to deal with the health crisis, such as augmenting health care facilities, quarantining, lockdowns, social/physical distancing, restrictions on travel, restrictions on social and economic activities, etc.; and, those to deal with the economic crisis, such as income support, unemployment benefits and social security, easier loans to individuals and businesses, etc.
This policy note analyses the policies adopted to deal with the economic challenges in four countries, namely Brazil, Germany, South Africa and the USA. The objective is to review the scale and the nature of policy interventions in select countries that might hold lessons for India. The policies have only been reviewed in terms of scale and nature, not in terms of their effectiveness or strength/weakness, which can only be done once the crisis has played out. It is important to note that these policies are ongoing and that governments are continuously announcing new policy interventions.
The policies analyzed in this paper refer to those that had been announced as of the end of September, 2020.