India is staring at a “sombre economic situation”; it needs to lift the lockdown to kick-start economic activities, and it needs a major stimulus, several members of the economic advisory council of the finance commission (FC) argued at a two-day virtual conference on Thursday, according to two officials familiar with the proceedings of the meeting.

The meeting, chaired by the head of the 15th FC, NK Singh, was attended by several prominent economists, including Sajid Chinoy, Prachi Mishra, Omkar Goswami and Neelkanth Mishra.

The meeting of the FC came in the backdrop of a series of consultations the government is having to assess the economic fallout of the pandemic and the subsequent lockdown to contain its spread, and the measures that can be adopted to tackle the distress. On Wednesday, Prime Minister Narendra Modi had a long brainstorming session with economists, where Niti Ayog’s vice-chairman, Rajiv Kumar, and chief executive officer, Amitabh Kant, made presentations.

In the FC meeting on Thursday, experts first pointed to the deep structural crisis confronting the economy. According to the first official present in the meeting, economist Omkar Goswami said that the current crisis was worse than the Great Depression. Goswami, however, refused to officially comment on the closed-door meeting. Two other economists termed the situation “sombre”.

A second official said that the economists painted a bleak picture of the impact of the lockdown, and said that it would not only impact the growth trajectory in this financial year (2020-21), but the next one — and a turnaround was only possible by the end of next year partially, and in 2022, more substantially.

The crisis facing the medium, micro and small enterprises figured as a key concern in the meeting. Among specific suggestions, Goswami said that small industries with an investment of less than ₹50 lakh must be provided assistance. While this was supported by others, chairman Singh asked what would be the vehicle of this financial assistance, according to the first official quoted above.

Singh did not comment on the meeting and his office said that he would be addressing a press conference after the conclusion of the two-day consultation on Friday.

The meeting also considered the appropriate size of the stimulus. Critics have pointed out what while countries such as the United States have announced stimulus packages of up to 10% of their GDP, India’s relief package so far — of ₹1.7 lakh crore — is less than a percentage of its GDP. Industry bodies have demanded a stimulus package ranging between ₹14-16 lakh crore, while some economists have even called for a ₹20 lakh crore package.

“There are all these figures that industry is suggesting as a stimulus package. Someone says 5% of the GDP and someone says 7%. But the key question is the composition of this package and how you are going to spend that money,’’ said the first official. Deliberations on matters such as these have, according to him, led to a possible delay in the government’s announcement.

The timing of the package was also discussed in the meeting. Economist Neelkanth Mishra said that the stimulus package should be given once the lockdown is lifted, since this was when businesses would need it the most to resume activities, according to the second official quoted above.

Economists emphasised that the government had to play a major role in jump-starting the economy, with more investment in programmes such as the Mahatma Gandhi National Rural Employment Guarantee Scheme.

On Friday, economists Arvind Virmani, Indira Rajaraman, M Govinda Rao, Sudipto Mundle, DK Shrivastava and chief economic adviser Krishnamurthy Subramanian are expected to attend the meeting and present their views.