The Indian Economy in the crucial phase of Covid 19 | Adamas University

The Indian Economy in the crucial phase of Covid 19

Covid-19, Economy

The Indian Economy in the crucial phase of Covid 19

The Lockdown

The first case of the 2019–20 coronavirus pandemic in India was reported on 30 January 2020 and first official Lockdown or Janta Curfew was observed on Mar 22 2020. The 14-hour janta curfew or voluntary public curfew was followed up with lockdowns in 75 districts where COVID cases had occurred as well as all major cities.  Furthermore our honourable Prime Minister on 24 March, announced  a nationwide lockdown for 21 days. This was first major jolt which affected the entire 1.3 billion population of India. It was once again extended On 14 April, and the Nationwide curfew will continue till 3 May.

2019 – Indian Economy

It is very important to understand how India was faring pre and post Lockdown at the Economic front. From the blog page of IMF we came to know that from last quarter of 2019 the whole world was in a synchronized slowdown and downgrading growth for 2019 to 3 percent, it was slowest pace since the global financial crisis. The reason behind this weak Growth pattern was due to rising trade barriers and  ever increasing geopolitical tensions all across the globe. World Economic outlook projected a modest improvement in global growth to 3.4 percent in 2020. Which was again a downward revision of 0.2 percent from their April projection. The sharp deterioration in manufacturing activity and global trade were the two needle which had effectively punctured the growth rate. Also in addition to this the higher tariffs and complicated Trade policy along with growing uncertainty damaging investment and demand for capital goods. One of the major hit was Auto Industry. The Auto industry started contracting their production. This was due to a variety of factors. The major was disruptions from new emission standards. It was mainly in the Euro Area and China. Overall, trade volume growth in the first half of 2019 has fallen to 1 percent, the weakest level since 2012.

India was part of the global slow down we have experienced severe setbacks. The Unemployment percent was at its peak and overall GDP started showing the deviation from the projected growth. The GDP growth rate for the first quarter of 2019-20 has been revised to 5.6 per cent, and for the second quarter to 5.1 per cent. Therefore, the GDP growth for the third quarter at 4.5 per cent is showed that India could not hold up to the promise. Though at the end of third quarter there was a marginal increase of .2 percent and stood at 4.7.

The Fork

In the midst of this global pandemic the Financial Year ends and It is very interesting to find out how we faired and what is the projection. In Chess there is a move called Fork. Is a tactic whereby a single piece makes two or more direct attacks simultaneously. Most commonly two pieces are threatened. The attacking piece is called the forking piece over here it is COVID 19; the pieces attacked are said to be forked that is Economy and people’s life. A piece that is defended can still be said to be forked if the forking piece has a lower value. Now the biggest challenge over here is to decide which has a lower value. The Lockdown is without any doubt saving more life but simultaneously the Economy is getting a Major Hit. The Indian Lockdown is World’s biggest lockdown and an Independent study shows It may have cost India close to 7 to 8 Lakh crore. This is a huge loss.  One of the renowned Ratings & Research company declared that the Lockdown in India will cost the  economy almost USD 4.64 billion (over Rs 35,000 crore) every day and the entire 21-day lockdown will result in a GDP loss of almost USD 98 billion (about Rs 7.5 lakh crore).

It is amount estimated till April 15. But as we see the Lockdown has extended till May 03, we all may understand the loss would be even more. The Confederation of All India Traders made an estimation on the loss. This is the loss that would be incurred by the retail trade of the country in the second half of March due to the COVID-19 pandemic. The amount would massive USD 30 Billion.

The Indian retail sector comprises of 70 million small medium and big traders employing 45 crore of people. All-inclusive they do a monthly business of approximately USD 70 billion. These SMEs and MSMEs are in huge loss and employment growth is slipping down.

Asian Development Bank (ADB) predicted India’s economic growth slipping to 4% in FY21, while S&P Global Ratings has further slashed its GDP growth forecast for the country to 3.5 per cent from a previous downgrade of 5.2 per cent.

The  Solution

In this dark time do we have a hope. That is biggest question. We do not know. We are only speculating and thinking some miracles to happen. What would happen once the Lockdown is lifted. Life and Economy both are important and being forked. It has been predicted that there will be huge job losses which needs to be minimised. Increase in unemployment might have a snowball effect with millions of graduate pass out every year and start standing in the que. The COO of Vested Finance prescribed Government stimulus to ensure job losses are minimised is very important. India so far has committed 0.7 percent of its GDP amount to around $23 billion. This amount will be distributed in the form of health insurance for health workers, cash transfers, free food, and gas distribution. But if we look at the other countries and understand to what an extent and impact of support they have provided, it is highly understandable that India must consider a second and a larger stimulus. That will be necessary for India to prevent significant collapse of small businesses. If only the SMES and MSMES start operating and once again start giving employment India has a chance to pass through this dark Period

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