COVID and Macroeconomics

The COVID-19 pandemic may affect the financing opportunities for innovation. The revenue loss induced by the pandemic is likely to divert the existing resources in aiding firm survival and economic recovery, with financing innovation taking the back seat. Highlighting the current state of innovation in the country, the rise of the country in its innovation ranking and its existing sources of funding is brought to the forefront. Various avenues presently exist for this purpose and more outlets could be explored to boost the funds for innovative efforts. Experience and policies of other emerging economies can help devise suitable measures that could further enhance India’s trajectory up the innovation ranking.

The COVID-19 pandemic has provocatively challenged the extant paradigm of development whose theoretical underpinning is derived from the neoclassical ideology of market-mediated growth. The Indian context of the pandemic is examined, and a reimagining of the development path for a more rational and egalitarian democracy is argued for. Some of the postulates of Thomas Piketty outlined in his Capital and Ideology are brought home as a pointer to stimulate thinking by all, especially the social scientists.

A damning critique does not allow India to remain self-complacent on the economic and health fronts.

The unprecedented lockdown has pushed economies into dire straits and also raised hopes that they would soon rebound to the old normal as soon as the pandemic is contained. But this is unlikely as the deterioration in the resource position and slump in demand can be reversed only by discarding the usual macroeconomic framework and by using a different approach and implementing out-of-the-box solutions. This analysis enables us to understand what policies may or may not work during and after a lockdown and the role of a stimulus and its magnitude.

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