According to UNCTAD, the aggregate cost of the crisis has been exorbitant for the global economy, with developing countries bearing the brunt of the impact due to restricted fiscal space, tightening balance of payments constraints, and insufficient foreign support.
The United Nations Conference on Trade and Development (UNCTAD) said on Thursday that India’s Covid-19 stimulus fell short of estimates, resulting in a weaker economic performance in 2020 than anticipated.
India’s relief initiatives, it said in its Trade and Development 2020 update, were not only much smaller in scope, but also focused on easing supply side constraints and providing liquidity support rather than aggregate demand support. According to UNCTAD, India’s GDP will contract 6.9% in 2020 and rise 5% in 2021, with the stronger recovery anticipated in 2021 due to the deeper-than-expected decline in 2020.
“Moreover, restrictions on people’s movement not only had a negative effect on incomes and consumption, but they also failed to stop the virus from spreading,” the UN agency said in a study titled ‘Out of the frying pan… into the flames.’
As a result, the decline in economic activity was greater than anticipated in mid-2020, according to the survey. “The budget for the fiscal year running from April 2021 to March 2022 also points to a move towards demand-side stimulus, with an increase in public investment (particularly in transportation infrastructure) for the coming fiscal year,” it said, adding that an expected improvement in global demand would also help boost the export sector through 2021.
ECONOMY ON A GLOBAL SCALE
According to UNCTAD, the aggregate cost of the crisis has been exorbitant for the global economy, with developing countries bearing the brunt of the impact due to restricted fiscal space, tightening balance of payments constraints, and insufficient foreign support. Furthermore, though this year will see a turnaround in all areas, potential health and economic threats may still cause slippages.