The decline in economic activity because of the Covid-19 lockdown is unprecedented in India’s history. Its impact on the real or productive sectors of the economy is worse than what was witnessed in the aftermath of the 2008 Lehman crisis, which had reached its peak in the month of September 2008.
The collapse may appear similar in both cases, but the reality is different. The 2008 economic crisis was a slow burn, and events, including macroeconomic developments, played out over months, while this time it is a sudden dip in economic activity after the lockdown was announced on March 24. This comes out most clearly in the dip in electricity generation and passenger vehicle sales where the impact has been immediate.
For example, daily average electricity generation declined from an average of around 3,800 million units (MU) in the first half of March 2020 to around 2,800 MU