The COVID-19 pandemic has triggered a truly global shock: the necessary measures taken to control the spread of the virus have resulted in a major economic and human crisis. The crisis is unprecedented and requires unprecedented measures. By providing families with cash so that national consumption is increased, a fiscal stimulus should enable countries to lower the depth of any recession and, importantly, strengthen the speed of their economic recovery with the potential for higher economic growth.
Most South Asian governments have put in place fiscal responses to protect both their economies and people. However, the responses have been too small to act as effective economic stimuli while the level of income support provided to families has been below what is required to maintain their level of consumption during normal times. It is essential that South Asian countries implement larger-scale social protection responses to minimise the losses to their economies, support their populations and promote economic recovery.
This paper was prepared for UNICEF to facilitate the exchange of knowledge and to stimulate discussion on how to fund an effective fiscal response. It presents alternative fiscal responses based on universal lifecycle transfers. Simulations indicate that such programmes would reach high coverage of those affected by the crisis and significantly enhance household consumptions. Overall, the emergency lifecycle transfers would guarantee the vast majority of families across South Asia a minimum level of monthly income.