INDIAN ECONOMY amidst COVID-19

COVID-19, has happened to the New Normal in the lives of people around the globe.

It could be said that, the world is facing humanity’s biggest crisis since World War II. Almost every country has been affected by the devastating Coronavirus disease (COVID-19). An outbreak from China has gone everywhere.

Till date, over 1.5 million people had been affected by COVID-19 worldwide. Indirectly, billions of people have been suffering from the impact of the global pandemic of COVID-19. 

Undeniably, this coronavirus has put the world economy at a major risk. The virus has ravaged the economic foundations of world trade. Few critics have observed this outbreak as an outcome of de-globalisation.

Due to this, the world is already facing a downturn and global losses, a few experts have also commented that this hyper-globalization may exceed the effect caused by World Wars I and II.

Most of the estimates of the economic loss show that the world is already in an economic crisis and the post-COVID-19 growth plan, thus play a vital role in the overall growth of the world.

Influence of COVID-19 over Indian Economy:

India faces a huge decline in government revenues and growth of the income for at least two quarters as the Corona-virus hits economic activity of the country as a whole.

The economic impact of COVID-19 is very alarming. No business, no job or no-one has been spared of its ill effects. Economies of about 100 plus countries have been destroyed out. Businesses across the world namely hospitality, entertainment, aviation etc have seen a major negative impact.

Indian Economy - A big shift:

There has been a drastic change in the world economic market and the share market has witnessed crashes day by day. Factories, Restaurants, Pubs, Markets, Flights, Super Markets, Malls, Universities and Colleges etc. were shut down. Till date fear of corona virus has limited the movement of the individuals and somewhere impacting the economy of the world as a whole.

The lockdown in India had a sizeable impact on the economy mainly on consumption which is the biggest component of GDP.

Covid-19 effect: Time for Made-in-India tag to go global

India needs to go beyond being just self-reliant; it needs the Made-in-India tag to go global.

China and its handling of the virus has impacted the economics of globalization, fueled anger in world capitals and also flamed anti-Chinese campaigns. Dependent on made-in-China raw materials and goods, nations world over are today rethinking trade ties with this country. India not only cancelled orders for ‘faulty’ rapid COVID-19 test kits, it revised Foreign Direct Investment policy to curb opportunistic attainments of Indian companies aimed at China.

Common sense dictates the economic world to take wise steps in manufacturing and sourcing. While that may not be possible immediately, nations like India can step up to the challenge.

As an entrepreneur I believe that the Atma-Nirbhar Bharat scheme could give the much-needed boost to the country’s disrupted business operations by promoting Make in India manufacturing and encouraging substitution of imports of low-technology goods from other countries, particularly China and encourage local produce at lower prices.

The big sum stimulus package announced by the government focuses on tax breaks for small businesses, as well as incentives for domestic manufacturing. The collateral-free assistance handed out to MSMEs will help crank up their operations. This move by the governments can aid in recovering India’s factory output, which plunged to record lows in March, with the Index of Industrial Production contracting percentages.

Anti-China, Pro-India:

China has been a growing influence on other developing economies through trade, investment and ideas. Practically every household—from electronic device, household product or consumer durables consumes China-manufactured products. Be its investor-friendly policies or efficient manufacturing base, the nation began to reform its economy in 1978, and GDP growth has averaged almost 10% a year.

In my recent research, I learnt that the World Bank 2018 data suggests, China in 2018 had 14 trillion dollars GDP growth, which was an increase of more than 2 trillion dollars in comparison to 2017. But with the word of thought all this have a tendency to change.

Currently, a sort of fear psychosis is visible, most of the shipments have been denied entry into US ports. China’s agriculture and consumable has witnessed a big downfall. So, investment in the food processing sector could be a big opportunity for India as with full probability the world trade could move out of China.

Experts believe that the India’s GDP will grow at 1.9% in FY2021, making it the only other major economy beside China estimated to grow. A lot of its growth could be a result of a post-COVID world with anti-China sentiment. Experts also feel that the global economy could emerge from the nose-dive towards the end of the year only if supply-side constraints ease and demand revives.

Global companies that thrived on the efficiency and low costs of Chinese production are likely to move their base in the aftermath of COVID-19. South Korean and Japanese firms have already revealed interest in migrating towards production-conducive economies like India, Vietnam and Thailand. Many other countries have upped their game towards India as suitable manufacturing hubs.

As per the US-India Strategic and Partnership Forum, 200 American corporations had already sought to move their manufacturing bases from China to India in mid-2019. The following process is surely going to accelerate post-COVID.

As the whole world eyes agri-produce from China with caution, this is where India can smartly score. As part of the Atma-Nirbhar scheme, a swerve of incentives for the agriculture sector have been announced which will can surely aid in building post-harvest management infrastructure.

India is a big exporter of rice, tea, meat, milk products, honey, horticultural and organic products, which will have to overcome the COVID-19 challenge.

Post-COVID many countries are turning towards India for processed food, marine produce, meat, fruits, vegetables, tea, rice and other cereals as they are apprehensive to import edible products from China. 

The Stump Issues:

If this crisis is seen as an opportunity, there is a need to introduce structural reforms like significant labour and land reforms, allowing businesses to hire and fire, handholding investors, direct tax benefit in special economic zones and plug-and-play facilities.

India’s comparatively low wages make it a much more cost-effective place to manufacture certain types of products.

It is firm that society conserves both lives and livelihoods. To do so, India can consider a concerted set of fiscal, monetary, and structural measures and explore ways to return from the lockdown. This reflects its situation and respect the most important belief: the purity of human life.

As an entrepreneur I can strongly feel that India is all set to be the world leader in exports by revamping the livelihoods of its people for good. Therefore, it could be said that the current downfall is very temporary.