Effects of corona on Indian Economy
India’s economy is among the 15 most-affected economies, with a trade impact estimated of 348 million dollars. With an already delicate economy and a population of 133 crores, the current crisis becomes even more critical for the nation- economically as well as socially.
Covid-19 has created a ginormous shift in the way human world functions. It has made us question our social structures, the way our policies work, inequalities of healthcare and scientific research system but most of all it has shown how interlinked global economy is with all these factors. According to a UN report, almost $50 billion of global exports in February has been wiped because of the pandemic. With deepening coronavirus crisis, the global economic crisis is also becoming graver.
Globally, the worst affected sectors include machinery, automotive, hospitality, etc. are contracting gross domestic growth of several countries, as per the estimates published by the United Nations Conference on Trade and Development (UNCTAD).
China, where the virus originated and which is the manufacturing hub of the global trade world, saw a massive decline in its first quarter’s GDP. It slumped to 6.8% as compared to the previous year, the country’s worst performance since the year 1992. UNCTAD report says, drop in China’s growth is most likely to affect economies of other countries.
India’s economy is among the 15 most-affected economies, with a trade impact estimated of 348 million dollars. With an already delicate economy and a population of 133 crores, the current crisis becomes even more critical for the nation- economically as well as socially.
Apart from the global trade ripples, the Indian government has also put cities under lockdown, cancelled services like railways and suspended visas to restrict the spread of the virus. Though the measures are proving effective in terms of the slow growth rate of active cases in India which is 5.1% as of 24th April 2020, the economic activity in the service sector like hospitality, aviation, tourism and trade is stalling.
In a report by the Moody’s Investors Service, the Indian economy is forecasted to grow at 2.5% in the fiscal year 2020, which was earlier predicted to be 5.3%. The rise in the unemployment rate, a decline in household disposable income, and the fallout of businesses together create a vicious circle, emergence from which will take strong fiscal and monetary policies from the side of the government and financial institutions.
The Indian economy looks bleak as of now, but there is a silver lining to it. Amid the ongoing coronavirus pandemic, global perspective towards China as the sole manufacturing hub is diluting. India with its massive human resources and international diplomacy can use this opportunity to build itself as the new focal manufacturing point for global businesses.
Lower oil prices are also cushioning the government’s revenue collection scope. As global recession risks mounts, India would need to grab every window of opportunity to prevent its economic slowdown spiralling into economic stagnation.