A study commissioned by the Kerala government on the economic and fiscal impact of Covid-19 in the state has stated that an immediate turnaround of the economy after the lockdown ends is unlikely. It estimated that a stimulus package of Rs 17,000 crore is required to revive the Kerala economy.
The study was conducted by the Gulati Institute of Finance and Taxation (GIFT), an autonomous institute of the state government, in Thiruvananthapuram.
It has predicted three months as the recovery period for most sectors. However, adverse effects will likely last six months for sectors such as tourism, entertainment and travel.
The study stated that agriculture has to be the centrestage of any recovery package. “Interventions in the sphere of production alone, without concomitant initiatives on other parts of the value chain, could be self-defeating. Hence we call for linking the producers directly with the consumers by making effective use of the existing institutional architecture and encouraging new innovative interventions,’’ stated the study, conducted by a team led by GIFT Director Prof K J Joseph.
On the stimulus package, it said the Union government could transfer money directly to producers of goods and services and workers, or give it to the state government for onward transfers.
The report estimates loss of state output due to the lockdown, shortfall in revenue receipts of the government, loss of earnings of the self-employed and workers as well as the finances required to revive the economy. The finance of the state is crucially dependent on the state’s GSDP, which was hit by supply shock and demand shock.
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The supply shock on sectors heavily dependent on other states is likely to be harder and more prolonged than those with supply chains within the state.