"Some of India's top business chiefs exuded confidence about the strength of the ongoing demand recovery in key sectors and added that the worst is over for the beleaguered economy. Green shoots are visible in macro-economic numbers and high frequency indicators." "An internal Citi report on India's Atmanirbhar plan notes opportunities in industries as diverse as manufacturing, services, solar and chemical industries," and predicts that it could add $160 billion to India's trade by 2024. "The Indian consumer considers the festival season between Navratri and Diwali (17 October to 14 November this year) auspicious for making purchases," wrote Vivek Kaul. Around 30% of sales of two-wheelers and 35-40% of sales of consumer durables take place during this period. "As per the recently released Gross Domestic Product (GDP) figures, private consumption expenditure was down 26.7%," and "time deposits (or fixed deposits) between March 27 and August 14 jumped by a huge Rs 6.7 trillion" compared to around Rs 3 trillion over the same period last year. Four economists "have argued that a supply shock which affects different sectors of the economy asymmetrically will result in an eventual demand shock". wrote Niranjan Rajadhyaksha. Even though India is not an advanced economy it could still suffer a two-stage economic shock, "with a supply shock being followed by a demand shock". "The economic impact of Covid 19 outbreak is progressing from a supply shock to a demand shock as incomes and jobs shrink according to a survey by BofA Securities and it expects demand boosting measures from the government." Another round of stimulus is required, wrote Karan Bhasin. "The intervention should ideally be fiscal as the key to revive aggregate demand in the economy." The government should spend more. "To boost decelerating consumption, government must spend at least Rs 5-6 lakh crore (Rs 5-6 trillion); the funds can be used to boost and strengthen infrastructure," wrote Shobhana Sunbramanian. "In August, Union finance minister Nirmala Sitharaman inaugurated the India Investment Grid website, an online dashboard that lays out information on large scale government infrastructure projects as an aid to investors, lenders, and companies bidding for work," wrote Tanya Thomas. But a study by Amar Kedia of Emkay Global found that of the 1000 projects listed, "less than a fifth were even remotely close to being tendered". "While the Reserve Bank of India (RBI) has been trying to pump liquidity into the system to encourage lending", banks have parked around Rs 7 trillion in the RBI through the reverse repo window, wrote Diva Jain. "For India's economy to turn the page on the covid crisis, the government must overcome its despair of the fiscal deficit." But what if people just save and pay off their debts from stimulus money? After all, you can lock people down by threat of force but you cannot force them to go out and spend. Stuck in a very hard place.
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