Since December 2019. The world has been dealing with the Coronavirus pandemic, and to limit the pandemic, the majority of the countries have established quarantines and social distancing practices and lockdowns.
The 69-day countrywide lockdown has wreaked havoc on all sectors of the national and state economy. As a result, the IMF forecasts a 1.9 percent GDP growth rate for the country in 2020, the slowest pace since the balance of payment crisis 1991.
Throughout the Thirteen five-year plan, the Government of Kerala had to deal with several challenges. First, significant weather events occurred in the country, with Cyclone Ockhi in 2017 and extreme precipitation events followed by floods and mudslides in 2018 and 2019.
In 2018, the state also had to deal with Nipah. In addition to natural calamities, the Central government’s stringent policy measures, such as demonetization and introduction of Goods and Services tax, impacted the state economy, particularly the financial resources available to the state for development activities.
Impacts of Lockdown
The 69-days lockdown can be divided into three stages, based on the limits imposed and relaxations granted. In the first stage of 27 days, from March 24 to April 19, a lockdown similar to a curfew was enacted in the country. All Federal and government offices, as well as the commercial and private businesses and commute services, were shut down. In addition, all kinds of functions, places of worship, and educational institutions were closed except for a few essential services.
A few relaxations were allowed during the second stage of lockdown, from April 20 to May 3, and more time-outs were permitted during the third stage of 28 days, from May 4 to May 31. As a result, the rate of loss in the production of goods and services or GSDP differs for each of the three stages.
The lockdown has resulted in massive job losses in all sectors. More than 50 percent loss of employment was observed in most of the tertiary sector’s subsectors. It ranged from 50 to 80 percent in sectors like industry and construction.
Kerala’s GSDP Loss
The COVID pandemic has thrown the economy into disarray and put a strain on state finances, with Kerala’s economy expected to lose ₹1,56,041 in 2020-21, according to the Budget Estimate of 2020-21. The GSDP reduction could have been worse, but a ₹20,000 economic boost was revealed earlier in the pandemic. This stimulus package assisted the most vulnerable members of society and significantly reduced the impact of COVID-19 on GSDP.
Over the Budget Estimate 2020-21, the state’s revenue is expected to grow at a rate of 6.5 percent, and GST collection is a sign of a more rapid economic recovery.
Some lotteries curb unemployment in the country, one of which is Win-Win Lottery. One of the lotteries run by the state of Kerala is Kerala State Lottery, and it comes with many benefits. For example, the GST collected from the sales of lottery tickets has been used to fund numerous welfare schemes in Kerala.
Kerala’s Economic Response to Pandemic
While anticipating the adverse impacts of COVID-19, the government of Kerala took some initiatives to protect the state’s economy and the lives of people. These include bringing money into the economy via direct and indirect aid, ensuring food and shelter for the poor, creating job opportunities, and increasing agricultural and industrial production.
To ensure a V-shaped recovery and ensure jobs, the government plans to immediately start the sectors such as tourism, MSME, and agriculture. Kerala Infrastructure Investment Fund Board (KIIFB) and externally aided projects would increase capital expenditure. Measures to improve development and well-being shall continue, health protection will take precedence, and improving the quality of higher education will be given priority.
Notably, the Kerala state government unveiled an economic assistance package worth ₹ 20,000 crores on March 20, 2020, which was a significant amount.
