Economic hysteresis, the Economic Survey 2021, states must be avoided at all costs. The survey pointed out that the coronavirus pandemic created a significant negative shock to demand. Bankruptcies and job losses might not be fully retrieved, which would create the possibility of an economic hysteresis.
"Covid-19 pandemic has created a significant negative shock to demand. The various costs of financial distress that firms face even before potential bankruptcy combined with possible firm bankruptcies in a choked bankruptcy system, on the one hand, and the possibility that jobs lost during the lockdown may not get fully retrieved, on the other hand, create the possibility of economic hysteresis that must be avoided at all costs," it stated.