A virus infection for a weak economy.

"The Center is looking at extending the lockdown beyond April 14 after many states and health experts suggested such a course of action on the ground (sic) that the Covid-19 threat is still looming large." "India's already-slowing economy weakened to at least an eight-year low this quarter and will slow even more sharply in the next six months due to the global coronavirus pandemic, a Reuters poll found." "India's informal sector, the backbone of the economy, will be hardest hit as economic activity comes to a standstill." According to Nomura, economic activity will take time to pick up as it will take longer for people to overcome their fear of going out, government finances will be stressed as tax collections fall and bad loans at banks will increase as earnings of companies and individuals fall. The Reserve Bank (RBI) cut interest rate by 75 basis point to 4.40% on 27 March. With retail inflation at 6.58% in February, it means the real interest rate is at minus 2.18%. Real interest rate has been negative since December 2019 which means savers are losing more through the loss of buying power of their savings than interest paid by banks, while the rich can borrow at favorable rates to increase their assets. "The last time India witnessed negative interest rates was the two-year period between March 2012 and January 2014, when surge in crude oil prices had led to the situation of galloping inflation in the country." At around $30 a barrel, crude oil prices are at rock-bottom, allowing the government to earn a fortune through enormous taxes on fuel. The price of petrol at the pumps is around Rs 70 per liter in India, while the price of petrol in the US is around $2 per gallon. At Rs 75 to the dollar and one US gallon being equal to 3.8 liters, it works out to around Rs 40 per liter. That is how much the government in India is clawing out of the people in taxes. However, because of the lockdown, petrol consumption has fallen and so has tax collection. "The Center may need to borrow 2-2.5% of GDP, about Rs 4-5 lakh crore (Rs 4-5 trillion) additionally for supporting people and businesses hit hard by the coronavirus outbreak and nationwide lockdown, according to former Finance Secretary Subhash Chandra Garg. "If you are looking at immediate mitigation, I do not think that the government has any option but to print money and spend it," said former Chairman of the State Bank of India Arundhati Bhattacharya. The coronavirus lockdown could cost India $120 billion, calculated experts. More if the lockdown is extended.  India cannot afford to keep its economy locked down and must get its people back to work sooner, wrote Ruchir Sharma. If only the economy had been sound before the virus.