This study uses a computable general equilibrium model to analyse whether the economic relief package offered by the Indian Government to the affected parties during the COVID-19 pandemic had any lacunae or alternative policies and institutional arrangements could have been devised to minimise the economic losses caused by the pandemic in the country. The results reveal that existing economic relief packages saved a loss of almost 3 per cent in GDP. In contrast, spending 6 per cent of GDP as cash incentive to the producers would have resulted in only a 1 per cent fall in GDP. We argue that the pandemic raises transaction costs for the producer, and thus incentivising them will boost the supply of goods and services in the economy.