Indian Economy 2020
Indian Economy after the Coronavirus Covid-19
It is clear now that Corona Virus is dangerous for our body and our wealth because the global economic slowdown is what it has given to the world. Every single country out there is struggling to contain the infection and to revive the economic downtrend, which is turning out to be more dangerous than Corona itself. You wonder why? Here is the answer.
To contain the infection, all the countries around the world choose confinement as a preventive measure. It resulted in the shutdown of factories, manufacturing units, schools, colleges, markets, and everything. The infection didn’t go anywhere, but the lockdown caused industries and businesses to go in the loss, and many small scale industries were bankrupt due to no income during that period.
The global demand and supply were also affected by all this, and the result was the global economic slowdown. However, Countries are taking necessary steps like stimulus checks, cuts in taxes, and support for industries and businesses and unlock even when Corona is ragging with full force.
The Condition of our beloved country is no different, and the graph of Corona infection will touch 5 million in a few days, and the GDP has seen the worst contraction of -23.9% in the Q1FY21.
Now, the big question WHY IT IS DOWN?
One big reason for the Indian economic slowdown is the strict confinement of people in their homes due to Coronavirus, which happens from March 22 to June 8. During that time, everything shut down, and no movement was allowed. The complete shutdown was the biggest reason for this sharp contraction in GDP of India. However, is it the only reason for the Indian economy to fall?
If you look at the reports of GDP in FY 2019-20 of India, you will see a decline in it, and at that time, the infection was not here. Here are some of the reasons that start the downward direction of the Indian GDP other than Coronavirus.
The first reason should be the GST implement which creates uncertainty in the Indian markets as it comes after the demonetization. The demonetization also contributed to it.
The second reason is the downward trend in the Global Economy. India largely depends on export/import, and the global economic slowdown has affected it.
Another reason for the slowdown in the way people invest these days. Digital payment and investment systems slowly changing the way people invest. People avoid taking a new risk, which means new investments are not happening as much as they should.
There are different reasons why the Indian economy seeing a downward trend and the biggest one is the Coronavirus. However, leadership is taking the necessary steps to ensure that the Indian economy comes out of this negative trend and can see a positive upward trend.
What measures the government is taking to make it better?
The real test of a government happens when odds are not in favor while, but this time the Indian economy is in its worst phase. So far, we all have seen only negative news about the economy, and how bad it is right now, the question arises: What is the leadership doing and what action has it taken so far? Today everyone wants the government to do something so that the country can combat economic slowdown and the pandemic. Here is what the government is doing to make the Indian economy better.
- The first step towards combating pandemic and reviving the economy, the government has announced a package of 1.7 Lake Crore.
- The repo rate reduced to an all-time low of 4.4%
- The Government of India has started to unlock from June onwards so that industries and businesses can start production and manufacturing, and demand and supply can revive up.
- India’s government is also focusing on small scale industries, direct cash payment, support for skill workers, and stimulus for the farmers.
- Relief from the tax payment, EMI is also there for business.
- Aatm Nirbhar Bharat Scheme which allows Indian merchants to grow.
Comparison with other countries in term of GDP
India is not the only country that has seen a downward trend in GDP. Countries like the USA, Germany, Italy, Britain, and many others have also witnessed their economy’s fall. GDP stands for Gross Domestic Product, and the pandemic has slowed down the demand and supply chain worldwide. The slowdown has resulted in a decline in GDP and an increase in unemployment.
- Here is a comparison between the GDP of other countries and India during the pandemic.
- The USA has seen the highest fall in GDP for FY20Q2 -31.7% compared to -23.9% of India.
- Other countries like the UK have seen -20.4%, Italy has -12.8%, Germany has seen -9.7%, and the list of countries with such contraction in GDP can go on.
- The only country that has seen positive GDP in China, the pandemic, started in the last 2019.
Most countries choose lockdown as an effective solution to combat the ongoing pandemic, which results in Global Economic Slowdown. The trade tension between China and the USA has also resulted in uncertainty in the global community, and it directly affects the economic conditions on the Global level.
When will it recover?
The pandemic has affected us far more in-depth than expected, and its impact is visible in the recent GDP announcement and global trends. We are nowhere near the end of the pandemic, and it is causing havoc and creating lots of uncertainty over the developing countries like India. The GDP of India mainly depends on the import/export and demand and supply. However, even the darkest cloud has the silver lining, and the Indian economy too recovered from this setback.
Most rating firms announce the Indian Economy revival by FY21, and American investment bank Goldman Sachs predicts positive trends in the Indian economy.
The Indian economy has seen many things, and this setback might seem biggest so far, but we will bounce back, and this time with more power. Increasing Covid-19 infection cases and poor economic conditions are the biggest challenges of this time, and we shall overcome these hurdles, too, with consistent efforts.