Govt can increase insurance coverage, provide credit support to SMEs: Deloitte report

These disruptions are likely to pose challenges not only in the next two quarters, but could also linger for some more time before the economy revives, given the uncertainty on how long the pandemic would last, it added.

Deloitte suggested that the government can manage the resultant public health crisis through augmenting financial resources, increasing insurance coverage and using technology solutions.

It also suggested protecting income and employment, particularly for the more vulnerable sections of the society through implementing direct cash transfer programmes backed by adequate monitoring and evaluation mechanisms.

It also advised supporting the corporate sector to minimise adverse economic impact and facilitate quick recovery through immediate measures (such as credit support to SMEs) or medium-to-long measures (such as building infrastructure and undertaking policies) that help reposition India in the world's global value chain.

"These suggestions, some of which the government has already acted upon, are expected to help the country mitigate some of the challenges at hand," Deloitte said.

Deloitte India Partner Arindam Guha said the Covid-19 outbreak has presented new and significant downside risk to the global economic outlook with all major countries like the US, China and the UK being severely impacted.

"We expect that the resultant economic disruption will take time to address and any Government response will also need to be properly calibrated and taken over a period of time," Guha added.

The report said that the pandemic outbreak is likely to affect the economy through four levers -- supply disruptions, fall in global and domestic demand, stress on the banking and financial sectors, and decline in oil prices.

"While the first three will adversely affect the economy, the falling oil prices could be a boon for India's twin deficit and input prices and may give policymakers some headroom," it added.