Economy: Post covid-19 lockdown
Economy:post covid-19 lockdown
Issued on:may 23rd
Published by: Indrani Kukkadapu
The following webinar report is about the
Economy:post covid-19 lockdown. It is also available in video form too on YouTube with the given link;https://youtu.be/2ELLI4AIHL0 . It was hosted by the moderator named Yashika tijoriwala. The panelists are Satyajit Roy, Associate professor, Institute for studies in industrial development and Surajit Das, assistant professor, Jawaharlal Nehru University. This webinar is about the crisis of economy during lockdown in post covid-19 lockdown. This webinar happened on 61st day of lockdown.
The economic impact of the 2020 coronavirus pandemic in India has been largely disruptive.
In India up to 53% of businesses have specified a certain amount of impact of shutdowns caused due to corona virus on operations, as per a survey in March. By 24 April the unemployment rate had increased nearly 19% within a month, reaching 26% unemployment across India, according to the 'Centre for Monitoring Indian Economy'. Around 140,000,000 (14 crores) Indians lost employment during the lockdown. More than 45% households across the nation reported an income drop as compared to the previous year. Various business such as hotels and airlines cut salaries and laid off employees. Revenue of transport companies such as Ola Cabs went down nearly 95% in March–April resulting in 1400 layoffs.It was estimated that the loss to the tourism industry will be ₹15,000 crore for March and April alone.
A number of young startups have been impacted as funding has fallen. A DataLabs report shows a 45% decrease in the total growth-stage funding as compared to 2019. According to a report venture capital in Indian startups has fallen over 50% in 2020 from 2019.
Electricity consumption has declined strongly after the national lockdown was enacted. It was nearly 30 percent below normal levels at the end of march and remained a quarter below normal levels in April. In May it was on an average 14 percent below normal and in June it was still 8 percent below normal. Lower electricity consumption implies lower economic activity. In the past, a unit of additional economic activity in India has been associated with 1.3 units additional electricity consumption. The economic impact has already been between 5.6 percent of GDP and 6.0 percent of GDP.
Government revenue has been severely affected with tax collection going down, and as a result the government has been trying to find ways of reducing its own costs.On 10 May 2020, Union Minister Nitin Gadkari said that some states didn't have enough money to pay salaries in the near future. In April, former Reserve Bank of India chief Raghuram Rajan said that the coronavirus pandemic in India may just be the "greatest emergency since Independence",while the former Chief Economic Advisor to the Government of India said in April that India should prepare for a negative growth rate.
The Indian economy was expected to lose over ₹32,000 crore every day during the first 21 days of the lockdown.
India had also been witnessing a pre-pandemic slowdown.
There is a big shift 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. Fear of corona virus has limited the movement of the individuals. People were not even going to buy the daily essentials and these all were somewhere impacting the economy of the world as a whole. The Organization for Economic Co-operation and Development (OECD)reveals that they have cut their expectation for global growth to 2.4% from 2.9%, and warns that it could fall as low as 1.5%.
India faces a huge decline in government revenues and growth of the income for at least two quarters as the coronavirus hits economic activity of the country as a whole. A fall in investor sentiment impacts privatization plans, government and industry.
The lockdown in India will have a sizeable impact on the economy mainly on consumption which is the biggest component of GDP.
India’s total electronic imports is equal to 45% that of China. Around one-third of machinery and almost two-fifths of organic chemicals that India purchases come from China. For automotive parts and fertilisers China’s share in India’s import is more than 25%. Around 65 to 70% of active pharmaceutical ingredients and around 90% of certain mobile phones come from China to India.
Disruption of supply chain and global trade
Covid-19 has disrupted global supply chains and this is generating spill over effects throughout different levels of supplier networks. Global trade in 2020 will fall in every region of the world, and will affect all sectors of the economy. This will impact countries that are strong exporters (no output for their local companies), but also those that are importers (lack of raw materials). The World Trade Organization (WTO) expects global trade to fall up to 32% this year due to the coronavirus pandemic.
A global recession now seems inevitable. But how deep and long the downturn will be depends on the success of measures taken to prevent the spread of COVID-19, the effects of government policies to alleviate liquidity problems in SMEs and to support families under financial distress. It also depends upon how companies react and prepare for the re-start of economic activities. And, above all, it depends on how long the current lockdowns will last.
The country is facing an extra ordinary challenging time in this financial year. India has to urgently find a way to cushion the demand side shocks induced by potential lockdowns and other ongoing containment measure.
Developing countries like India has more fragile economic and social fabric and the present situation will create more suffering for the unorganized sectors and migrant labour. Borrowing the words of former RBI governor C Rangarajan “Government of India must provide lifelines to businesses - extend loans and tax waivers to small businesses and the self-employed to retain staff -- give direct support to severely affected industries and provide more funds to states, tax waivers to households etc.”