Impact of Coronavirus (COVID-19) Pandemic on Indian Economy: A Brief Overview
Most of the Indians are
reasonably selfish and self-centered and it has been the main cause behind our
lack of togetherness in achieving growth, development and prevalent poverty.
Currently, we are going through a lifetime crisis in the form Coronavirus
(COVID-19) pandemic. The outcome of this crisis is not in our
hands.
Situation 1 – Pessimistic
Job Loss Due to Coronavirus (COVID
19) in India And Effect on Businesses
What will happen once India comes
out of the Coronavirus (COVID 19) crisis? This thought has been
in the mind of every person. Many are predicting gloomy days with millions of job
losses due to Coronavirus (COVID 19) in India and closures of
businesses. Micro, Small and Medium businesses will struggle to survive due to
lack of capital and demand. Hence, in turn, they have to reduce the manpower to
stay afloat in a turbulent economic situation. The aftermath of this action
will lead to widespread job loss. Millions of workers who work either on a
daily basis or contractual basis will be at the forefront of this crisis facing
basic survival like no money for food, clothes, rent, etc. We have seen the
mass exodus of migrant workers across India days after a nationwide lockdown
was announced.
With no income, people’s
purchasing power will reduce along with consumption and routine buying. As the
demand depletes, all small and big businesses will suffer that in turn will
impact the economy. This spiral of low demand and the depleting economy will
create a domino effect that will lead to more job loss and economic
uncertainty. Many credit rating agencies like Fitch and Moody have already
downgraded post COVID 19 economy forecast for India by 2-3% for FY21. Businesses
will become stressed with increased NPA and loan defaults. In the absence of a
job, individuals like you and me will not be able to pay EMIs for different
types of loans. Though RBI has deferred the EMI payment for 3 three months that
will not work if a person loses his job with grim uncertainty of getting a new
job soon. This will take a toll on the stock market and country could go into
one of the biggest recession ever that could take 3-5 years to come back to
normalcy.
Situation 2 – Optimistic
Stability And Prosperity After
Coronavirus (COVID-19) Pandemic
Every cloud has a silver
lining. Amidst this tragic situation, there is something to be hopeful for.
According to the latest updates by the United Nation and International Monetary
Fund, the world is going to witness an extreme recession with the exception of
India and China. People believe that the impact
of coronavirus (COVID-19) on India won’t be like other countries
such as Italy, France, Spain, the U.S. and situation will be quite similar as
they were before lockdown once India emerges out of Coronavirus (COVID 19)
pandemic. For many, this lockdown period is like a vacation and family
time and get positivity to go back to normal life.
Small and medium businesses are
not going to suffer due to the financial aid provided by the government hence
the possibility of business closure post-COVID 19 in India is very
unlikely. Hence, they should maintain calmness and not think about firing even
a single employee. Through this people don’t have to feel joblessness and
struggle for survival.
Consumption and routine buying
will remain as it was before. The economy will remain intact after 1-3 months.
There will be no downward spiral or domino effect and business’s health will be
sound. Businesses will be able to repay their loan after the moratorium period
(as per RBI) which is a great move by the regulator. Further, all individuals
will be able to pay their loan and the stock market will start to revive after
some downwards movement. Therefore, the country will stabilize and overcome the
recession.
It might sound like a utopian
situation and all wouldn’t believe this assumption. But there is no harm in
being hopeful and optimistic. Don’t Reduce Manpower - No job loss is a key
factor for sustained economy.
Government Action
So far, the central and state
governments have been very pro-active in dealing with the Coronavirus (COVID
19) pandemic and economic stability post COVID 19 and have done
a commendable job. The PM himself emphasized on ‘no job loss’ to avoid
long-term economic fallout. To help businesses bear the brunt of lockdown, the
government announced different measures to ease the burden of corporates such
as relaxation in tax and loan payment.
Post lockdown one of the key
challenges in front of the government will be the resumption of work and
speeding up of infrastructure-related projects when most of the workers have
moved to their home. Also, the government has to provide extra support to
sectors like automobiles, aviation, travel, and tourism as these will be most
impacted by the lockdown.
Banks and other financial
institutions should consider deferring the loan repayment for beyond 3 months
moratorium as said by RBI and the government should think in this direction.
The RBI has to maintain a loose hand on its policy rate for 2-3 quarters and
banks have to pass on these rate cuts to their borrowers.
Post COVID 19 India
Currently, the whole world is
desisting China due to its obscurity over Coronavirus (COVID 19) and
not informing the world in advance. Countries like the U.S, India, and the EU
are even raising questions on the role and complicity of WHO chief Mr. T
Adhnom. And if this global sentiment prevails for a long time; China could be
isolated just like Iran and North Korea and this would provide an opportunity
for India to shine and become a leader at the world stage.
Hence, it is for the utmost
importance that we all come together and rise to the occasion to fight the
deadly COVID 19 and come out stronger. India has always proved its mettle in
difficult times like these and the whole world is looking at us for a solution.
Therefore, as a nation, we should believe and determination to rise above. We
should make a collaborative effort to maintain stability and prosperity.
Nigh
is Darkest Before Dawn
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