Since there is no cure for Covid-19 yet, the only potent weapon to control its spread is social distancing, which necessitates lockdowns. But these containment measures have a huge trade-off in terms of livelihoods lost.

India started its fight against the pandemic with a stringent nationwide lockdown from March 24 midnight, and rightly so, given:

• Its high population density makes it more vulnerable (India’s population density is thrice that of China)
• Its fragile state of health infrastructure cannot take the medical overload if the pandemic spins out of control
  
• It has limited fiscal space compared with advanced countries, to spend its way out of the hardship
  

But the more we rely on lockdown measures, the greater will be the need to cushion the economy via fiscal stimulus. And that may be constrained by limited fiscal room. Moreover, the large unorganised labour force may have little option but to return to work sooner than later, as the government may not have the fiscal muscle to support all of them beyond a point.

India has extended the initial 21-day lockdown by another 19 days, till May 3. The second phase (April 15-May 3) appears less stringent than the first -- there are attempts to balance the trade-offs and include relaxation clauses this time, particularly for rural areas. But the leeway would depend on the ability of zone/states to control further spread of the virus. Although this is expected to provide much needed relief to agriculture, rural employment schemes, construction and manufacturing, the coming days will pretty much remain, a case of crossing the river by feeling the stones.

For the economy, the lockdown has already had serious consequences. The impact will vary by sector, but services, which accounts for over 55% of India’s gross domestic product (GDP), has been hit particularly hard.

There is also no escaping the global recession, with deep contraction in advanced countries. These developments will dwarf the gains from the sharp drop in crude oil prices, and the monetary and fiscal stimuli worldwide and at home.

What does the pandemic mean for India? Our economists have parsed every conceivable angle of the current cataclysm, to find answers to questions that simply won’t go away.