In a tour d’horizon interview that comprehensively explains the likely impact of panic, as a result of the surging number of Covid cases, as well as the proliferating lockdowns on the economy, one of India’s most highly respected economists and the country’s former Chief Statistician says that he believes the fear and panic that is prevalent and growing as well as the uncertainty about lockdowns and how long they will last could make this year 2021 worse than last year. Prof. Pronab Sen also says that whilst everyone in the country was fooled into believing India had vanquished the virus it was, nonetheless, the government’s duty to make contingency plans in the event that wasn’t the case and its failure to do so is “irresponsible”. As a result he says 11% GDP growth this year cannot be achieved. To do so would mean the economy has to grow beyond the GDP levels of 2019-20 and that, he says, won’t happen. This also means the government’s hopes of a V-shaped recovery will not be fulfilled. At best it could be an extended U. In fact, even earlier, it was more a K than a V. Finally, Prof. Sen said so far he hasn’t seen “any worthwhile response” from the government. He said the government is behaving as if time is on its side but it’s not. If the government does not take immediate action “there can be serious damage”.

In a 45-minute interview to Karan Thapar for The Wire Prof. Proneb Sen first spoke about the impact of the present climate of fear and panic on economic activity. “Any form of fear has a very substantial effect on the economic system. It changes people’s perceptions”. Prof. Sen said during the first Covid wave there was not much fear because the numbers were low and the death toll was low. Now, the numbers have gone up exponentially and deaths have gone up very sizeably and consequently the much greater level of fear will lead people to self-protect. That will dampen and restrict economic activity.