COMMENT | Asia is home to many exemplars of small but effective government, countries where sound policies and strong institutions underpin economic stability and robust growth. But during the Covid-19 crisis, many are pursuing expansive macroeconomic interventions and implementing measures that infringe on privacy. They are perched on the edge of a slippery slope.

To be sure, extraordinary times call for extraordinary measures. The Covid-19 pandemic has led to the deepest global recession since World War II with the International Monetary Fund predicting a 5 percent economic contraction in 2020 and a slow recovery after that. An “L-shaped” depression is a very real possibility.

Asia is no exception. While the Asian Development Bank expects China to achieve positive GDP growth, it predicts that India’s economy will shrink by 9 percent. Developing Asia’s GDP will fall by 0.7 percent – the region’s first contraction since WWII.

In response to these dire growth conditions, governments worldwide have expanded their fiscal spending considerably – with serious consequences for public balance sheets. This year, the government debt of advanced economies is expected to increase by 19 percentage points, on average, to 131 percent of GDP.

In Asia, both China and India are forecast to record fiscal deficits exceeding 12 percent of GDP, leading to a significant rise in the government debt-to-GDP ratio. In many Asian economies – such as China, Indonesia, and South Korea – that isn’t much of a problem, because those ratios are relatively low. But in some others – such as ...