India's commercial hub, Mumbai's Marine Drive deserted after imposition of lockdown

State after state has declared curfews and India’s international borders have been shut for most visitors since March 11

“This is the biggest lockdown in world history,” said Raghu Raman, a former soldier with the Indian army and founder of the National Intelligence Grid, an umbrella database aimed at countering terrorism. “This strategic pause gives decision makers more time to arrest the exponential spread of the virus and evaluate trade offs.”

Controlling the outbreak is crucial for Modi, who remains India’s most popular political leader currently though his economic management has faced criticism. Foreign investors are selling Indian assets at an unprecedented pace and failure to contain deaths and infections could erode some of the prime minister’s personal appeal at home.

Oxford Economics slashed India’s January-April growth forecast to 3%, a number not seen even during the worst of the global financial crisis. The main equity gauge slumped by a record 13.2% Monday and the rupee weakened past 76 a dollar for the first time ever. The benchmark 10-year sovereign bond plunged the most in almost four months.

“A part of the cerebral cortex that senses fear and survival seems to have activated in the minds of investors,” said Umesh Mehta, Mumbai-based head of research at Samco Securities Ltd. “The only relief in this market can come from either policy makers and regulators, or from some positive news that a cure for the pandemic is near.”

Bloomberg Economics estimates Modi’s administration needs at least 1% of gross domestic product — $30 billion — to meaningfully respond to the virus outbreak. Meanwhile, the nation’s billionaires are diverting their factories to manufacture medical equipment and pledging to keep paying their staff even as production grinds to a halt. India allowed companies to use their philanthropy funds to prevent the spread of the coronavirus.

Reliance Industries Ltd., controlled by India’s richest man Mukesh Ambani, has helped equip a hospital in Mumbai dedicated to patients of Covid-19, the disease caused by the coronavirus. It will also build quarantine centres and produce 100,000 facemasks a day and other personal protective equipment for health workers. The group’s telecom unit will offer free broadband to enable work-from-home during the lockdown and will pay its lowest paid workers twice a month to protect household incomes.

Ambani joins Mahindra & Mahindra Ltd. Chairman Anand Mahindra and Vedanta Resources Ltd. Chairman Anil Agarwal — a combined worth of more than $40 billion between the trio — who have so far made pledges.

Going by various reports from epidemiologists, it is highly likely that India is already in Stage 3 of transmission. —Cases could rise exponentially with millions of casualties, putting a huge strain on medical infrastructure (1/5) — anand mahindra (@anandmahindra) March 22, 2020

Indian companies are responding to Modi’s shutdown call. Maruti Suzuki India Ltd., Tata Motors Ltd., Toyota Kirloskar Motor, Hero MotoCorp., Samsung Electronics Co. and LG Electronics Inc., Mahindra Group, TVS Motor Co., Kia Motors Corp., Renault Nissan Automotive India Private Ltd., and Yamaha Motor India are among companies that have announced factory suspensions.

Policy makers are aware of the risks of such a move. India — with a record 5.9 trillion rupees of local corporate debt maturing this year — faces “waves of default” if cash flows aren’t maintained, the government’s principal economic adviser Sanjeev Sanyal said an interview.

Finance Minister Nirmala Sitharaman last week said the government will announce a relief package for coronavirus-affected sectors as soon as possible. The Reserve Bank of India, which is due to review interest rates April 3, announced a 1 trillion rupee cash injection on Monday.

“Let me assure, whatever it takes to keep the cash flow going in the economy will be done,” Sanyal said. “We need to make sure that when we are past the health storm, we still have an economy that has not gotten gridlocked. Because unwinding that would be more difficult.”