India confirmed its first covid case on 30th Jan 2020 ever since the country has seen a rise in cases.
Only after few days of Voluntary lock-down a nationwide lock-down was declared on March 25th which
was in effect till 14th April 2020.
The cases reported within the first week of lock-down were
approximately 1000 and doubled after 5 days period. The whole country was badly affected with a
constant surge as lock-down persisted to curb the effect of deadly Corona Virus. The nationwide
lock-down being one of the hardest lock-downs to be done has thus, hugely caused a drop in gross
domestic product (GDP) the Indian economy has ever reported.
The shrinkage for the period of quarter, 23.9% is far more than what the economists and analysists had forecasted. Sudden implementation of lockdown carried out in just a span of midnight have
caused lot job losses 140 million to be precise. This has also led to criticism in handling the COVID situation in the country.
The imposing of such harsh lock-down has showed what it costs through the country’s GDP a remark
made by an expert at oxford economics.
The market for private investment market has declined by
an approximate of 48% and the never-ending lock-down during April to June has also affected the
construction and manufacturing industry by having a reduction of 50 and 40% respectively as
reported. A small positive change was in seen in agriculture sector as 3.4%.
ECONOMY CONDITION AFTER LATEST UNLOCK AND WAYS TO REFORM
The economy of India has seen a sharp rise just after few aspects of the country were opened in May
2020 when people could buy essential items. A famous brokerage Nomura said the process of
returning of normal state of the Indian economy has lost its momentum. While the bad performance
of the economy was recorded, the chief economic supervisor stated signs of returning to normal
curve keeping in mid the rate and degree at which COVID virus spreads.
The pandemic has given a profound effect on all the world’s economic state, For Indian economy to
achieve the required state, it needs more banks to uphold and double it credit to GDP ratio as stated
by a board member of RBI. An immediate reform in policies is needed in sectors of labor laws,
banking, and education to achieve the set goal. As the country is set to open slowly under the latest
unlock guidelines, the FMCG sector is fully back while rest sectors like hotel, Airlines are still making
its way to jump in market despite so many opportunities can be seen floating around. It was also
seen that sectors in banking such as venture capital and equity funds have drastically slowed down
since march but this has also created the opportunity for who decided to hold their assets
throughout this period has seen a rise their funds.
The reforms should be made in such a way that it helps with positive change which can be seen for
next 25 years instead of aiming only for a quarter of year by creating a better environment for
startups and encouraging setups of small businesses.
Further ways the government can also drive the shrinkage towards positive side was suggested by
former Governor of RBI as Raghuram Rajan. The 5 ways suggested to curb the effects of the dip are
- Borrow Money without disturbing the present bond market and have transparent and honest
rates obtained through legalization. It should also be seen that the money borrowed is returned as
per fiscal numbers.
- Government should sell, sell, and only sell. Adding on he suggested the solution of selling the land
which are being held by top firms in potential areas. If the government attains high end sales during
period this gives a high chance of attaining great market goals and thus, required movement can be
3.Opposite of selling, more spending should take place with tried and tested methods such as
MGNREGA, and if rural areas are unable to access such schemes direct transfers or handouts of cash
can be done in this case.
- The private sector which can and are able to provide capital and resource rich fund should be
allowed to step in to help the business which have suffered during the lock-down.
- The last thing suggested by the Governor is need of stimulant which can create the required jobs
in sector such as construction.
The country has witnessed a shrinkage of 23.9% for the quarter. According to the chief economic
advisor K.V Subramaniam stated the recovery as V-shaped recovery based on data which varied from
38% in April to 26% in May and reducing even further to 9.6% in July 2020 as statement provided.
The economy is adversely hit globally, while India’s economic condition is recorded to
be worse seen in the past 4 decades. This has led to obvious problems of job loss, increase in
unemployment. There is an urgent need of proper compliance which can help to lift small business as the GDP is only reflecting the organised setctor losses and unorganized has taken a far greater hit that has not yet been taken into consideration.
and allows a long terms reforms which can help in recovery and growth of major and minor
platforms contributing in Indian economy.