Impact of “COVID-19” on Indian Economy
The outbreak of a pandemic COVID-19 is an unprecedented shock to Indian economy. The economy was already in a parlous state before COVID-19 struck, but due to prolonged country-wide lockdown the economy has likely faced a protracted period of slowdown. The pandemic is inflicting the country on both health and economic sectors. In order to avoid the pandemic spreading at larger extent certain actions such as imposition of social distancing, self-isolation at home, closure of institutions and public facilities, restrictions on mobility and even lockdown of an entire country has to be carried out. But, on the other hand these actions can potentially lead to the dire consequences of economy all over the world.
India was recorded with its first case of Covid-19 on January 30, 2020. Since then the cases have been increasing rapidly with 2,76,682 active cases and 21,604 deaths in India at present. The Indian economy is facing an uphill task in its battle to recover from the pandemic COVID-19 setback, resulting in a sharp contraction of 4.5 percent in this fiscal due to longer period of lockdown and slower recovery than anticipated. While, it is the India’s lowest ever economic rate achieved since 1961 as per the IMF’s records.
The pandemic COVID-19 has affected the country with much of negative impact on various sectors in the first half of 2020 than anticipated and recovery is expected to take place gradually with a robust growth rate of 9.5 percent GDP in 2021. Over 75 percent of the countries are reopening as the pandemic is intensifying in many emerging markets and over 95 percent of the countries are facing a negative per capita income growth in 2020. However, due to the absence of vaccine for pandemic, the strength of recovery is highly uncertain and its impact on various sectors of the country is uneven.
It might be the best time to provide financial aid or stimulus package and government should spend money in some of the sectors which were predicted to grow at faster rate. For example, Infrastructure like roads and highways, health sectors and Educations that would benefit from increased government spending. While bouncing back to normal stage is not possible at single shot, the way ahead is creating a demand by putting money in people’s hands and simultaneously start the supply chain. Providing aid at this point is important not only as an economic repercussions but also on humanitarian grounds.
On the other hand, Indian economy needs a major reforms in areas like land, labour and banking in addition to the undertaken measures such as Goods and Service Tax (GST) and bankruptcy law. Meanwhile, the International Monetary Fund (IMF) are planning to provide more fiscal support for India in the near term, particularly for vulnerable households and small or medium enterprise given the severity of the country's economic situation due to the impact of COVID-19 pandemic.
While Foreign Direct Investment (FDI) and deficit financing is another way good for long run, that will not cause any immediate inflations as we have stocks and won't fall short on supply. It cannot be the only weapon in prolonged attack to overcome this economic crisis, there are many other options into which the government has to look after in order to improve the economy of our country at much faster rate. Please share your ideas regarding how the economic drawback can be fulfilled and help in development of the country.