India earned the position of being the fastest growing and developing economy of the world. The most populous democracy existing on the globe and a startup hub, India’s economical status was on the growing front. But the invasion of COVID-19 has reshaped or damaged the analyzed forecasts for the country. The economic recession of historic proportion to hit India soon, according to experts.
COVID-19 triggered a nationwide lockdown starting from 25th March leading to a complete shutdown of industries. The economy came to standstill due to the lockdown. Home quarantine and isolation are weakening the limbs of businesses. However, India is playing its cards well to protect and save people in terms of health but the economy is under a deep freeze since the lockdown.
Forecasts For the Financial Year 2020-2021
India was expected to witness an estimate of 4.5% growth in the GDP (Gross Domestic Product). The GDP rate was expected to grow to $ 3.2 trillion in 2020 from $ 2.972 trillion in 2019. 44 Indians escaping extreme poverty every minute in 2018-19, the numbers were expected to grow at a wide range.
Our country acquired the fifth position for the largest economy in the past years and was expected to climb the ladder this year. With more than 1990 startups funded in 2019, new ideas and innovations would uplift the country’s economy in 2020.
To summarize, the year 2020 was stepping stone for the country’s economy.
How has COVID-19 affected the economy?
According to the World Bank, the developing countries would see a sharp decline in their economies due to the COVID-19 lockdown. This holds true for India as the economy is shattering adhering to the extending 50 days lockdown.
The lockdown has made it impossible for firms to sell their goods, households to earn money, banks to collect loans, housing schemes to collect rents or maintenance and as a result, the government is unable to collect taxes. COVID-19 has suppressed the generation of revenues in each part of the country. There will a 2% drop in the economy of the country, according to experts.
Effects of the Lockdown
- Supply chains and logistics are suffering
- Migrant workers and daily wagers affected the most due to loss of jobs
- Tourism industry collapsed
- Imports and exports have stopped
- Loss of liquidity
- No consumer activity
- Reduced fuel consumption
- Farmers in a vulnerable situation
- Layoffs and salary cuts in every sector
The lockdown has forced harsh decisions from companies and is unable to retain their valuable staff. Movement ban has slammed the logistic works and supply chains. Daily wagers no more have jobs and are struggling for basic needs like food and water. Loss of life in the vulnerable strata’s of the population. But it is true that an economic recession of historic proportion to hit India soon.
Schemes To Save The Economy
The government announced tax, rent, school fees payment extension across the country. The Reserve Bank of India made Rs 374, 000 crores available for the financial system. Economic relief measures for the poor totalling to Rs 170,000 crores. Many people across the country donated money in the PM Relief funds to fight the financial obstacle for the frontline workers.
The centre is also planning to release more funds to help the severely affected states as requested by the state ministers. The World Bank and Asian Development Bank will also extend help to India to fight the pandemic situation. Unfortunately, an economic recession of historic proportion to hit India soon.
RBI former chief Raghuram Rajan stated, “ The coronavirus pandemic is the greatest national emergency after the independence.”
Economic Recession Of Historic Proportion To Hit India Soon?
India is on the verge of losing jobs and businesses due to the financial income and investment crunch. Consumer activity will drop and the economic output of the country will see a sharp fall. The GDP is expected to shrink more than 0.9% if the lockdown is extended. Businesses are expected to bankrupt due to loss of operations.
Unfortunately, experts fear that India will have to face recession for the coming year due to pandemic. After 2008-09 economic battle, India will have to overcome this one too. The losses incurred during the lockdown hold equal to wars India has fought. Hence, the economic downfall is inevitable in 2020-21.
What Should Businesses Prioritize Post Lockdown?
Businesses should work to revive consumer demand and bring supply chains back on track.
Restarting businesses post the lockdown will be a serious challenge for every firm. Moreover, companies should pen down aggressive growth strategies and survival plans.
- Long-term policies to profit the business
- New marketing strategies
- Increasing consumer demand
- Understand the post lockdown human and world behaviour
What Are The Positive Effects of The Lockdown?
All the countries are trying to become self-sufficient. The economic status of the world is brutally damaged. But each country is trying to help each other in every possible way.
- Importance of Digital World
- Flexible working hours due to work from home
- Less pollution will help the health of the human race
- International understanding amongst countries
Read Also: Effects Of COVID-19 On Employment
The world will witness a 3.9% fall in GDP due to the worldwide shutdown. Governments and businesses across the globe are fighting pandemic together and hope to witness a corona-free world soon.
But nobody can deny that an economic recession of historic proportion to hit India soon.