India
is facing a steep decline in government revenue and an increase in income for
at least two quarters as economic conditions due to CIVID-19 affect the economic activity of the entire
country. The decline in investor sentiment affects privatization schemes,
government, and industry. The economic impact of the 2020 coronavirus epidemic
in India has been largely disruptive.
According
to the Ministry of Statistics, India's growth rate declined to 3.1% in the
fourth quarter of FY 2020. The Chief Economic Advisor to the Government of
India stated that this decline is mainly due to the coronavirus epidemic on the
Indian economy. Notably, a pre-pandemic recession was also observed in India,
and according to the World Bank, the current pandemic has "exacerbated
pre-existing risks to India's economic outlook".
Impact on the economic conditions due to CIVID-19: conditions due to CIVID-19: In the world economic market there has been a big change and the stock market is witnessing the day-by-day crash. Factories, restaurants, pubs, markets, flights, supermarkets, malls, universities, and colleges, etc. are closed. The movement of individuals is limited due to the fear of coronavirus. People were not even going to buy daily essentials and all these were affecting the world economy somewhere. Economic conditions due to CIVID-19
The Organization for Economic Co-operation and Development (OECD) has revealed that they have cut the expectation of global growth from 2.9% to 2.4% and warned that it may fall to 1.5%. And at least two-quarters are facing increased incomes as economic conditions due to COVID-19 affect the economic activity of the entire country. The decline in investor sentiment affects privatization schemes, government, and industry. The World Bank and rating agencies had initially revised India's growth for FY 2010-21 after financial liberalization, which India had done in the 1990s.
However,
after the announcement of the economic package in mid-May, India's GDP
estimates were further skewed by negative data, indicating a deep recession.
(The ratings of more than 30 countries have been downgraded during this
period.) On 26 May, CRISIL announced that it would probably be India's worst
recession since independence. State Bank of India's research estimates that GDP
will be over 40% in the contraction will not be uniform; rather it will vary
according to different parameters such as state and region. On 1 September
2020, the Ministry of Statistics released GDP figures for (April to June) FY21,
showing a contraction of 24% compared to the same period a year earlier.
China's total electronic imports to China are 45%. About one-third of the machinery and about two-thirds of the organic chemicals India buys comes from China. For automotive parts and fertilizers, China accounts for 25% of India's imports. About 65 to 70% of active pharmaceutical ingredients and about 90% of some mobile phones arrive in India from China. According to Nomura India, the Trade Regulation Index economic activity fell to 82.9 from 22 March to 44.7 on 26 April. Economic conditions due to CIVID-19
By
13 September 2020, economic activity had returned to pre-lockdown. Unemployment
rose from 6.7% on 15 march to 26% on 19 April and then returned to pre-lockdown
levels by mid-June. During the lockdown, an estimated 14 crore (140 million)
people lost employment, while the salaries of many others were cut. Compared to
last year, more than 45% of households across the country have reported a
decline in income. During the first 21 days of complete lockout, the Indian
economy was feared to lose more than ₹
32,000 crores (US$4.5 billion) every day, which was announced after the
outbreak of coronavirus.
Major
companies in India such as Larsen & Toubro, Bharat Forge, Ultra-Tech
Cement, Grasim Industries, Aditya Birla Group, BHEL, and Tata Motors have
temporarily suspended or substantially reduced operations. Young startups have
been affected as funding fell. The fast-growing consumer goods companies in the
country have reduced operations significantly and are focusing on essentials.
India's stock markets posted their worst losses in history on 23 March 2020.
However, on 25 March, after the Prime Minister announced a 21-day full lockdown
and NIFTY posted its biggest gain in 11 years.
Until
the "first unlock" on 1 June, India had varying degrees of economy
opening at different stages of lockdown. On 17 April, the RBI governor
announced further measures to counter the economic impact of the epidemic,
including 50,000 crores (US$7.0 billion) of special finance for NABARD, SIDBI,
and NHB. On 18 April, to save Indian companies during the epidemic, the
government changed India's FDI policy. The Department of Military Affairs
retained all capital acquisitions for the beginning of the fiscal year. The
chief of the defense staff has announced that India should reduce costly
defense imports and allow domestic production; also be sure not to
"misrepresent operational requirements".
On
12 May, the Prime Minister emphasized a total economic package of 20 lakh
crores (US$280 billion) on India as a self-sufficient nation package.
Announced. During the next five days, the finance minister announced the
details of the economic package. Two days later, the cabinet approved several
proposals in the economic package which included a free meal package. By 2 July 2020, several economic indicators showed rebound and recovery. On July 24,
India's finance secretary said that the economy was showing signs of rapid recovery,
while the economic affairs secretary said he expected a V-shaped recovery for
India. In July, the Union Council of Ministers passed the National Educational
Policy 2020 aimed at strengthening the economy.
Conclusion: A global recession now seems inevitable. But how deep and long the decline will depend on the success of measures taken to prevent the spread of economic conditions due to COVID-19, the impact of government policies to reduce liquidity problems in SMEs, and to support families under financial crises. It also depends on how companies react to economic activities and resume. And, above all, it depends on how long the current lock-down will last. The country faces an exceptionally challenging time in this financial year. India must urgently find a way to overcome the demand side shaking triggered by possible lock-downs and other ongoing preventive measures. Developing countries like India have more fragile economic and social fabric and are the current situation for unorganized sectors and migrant workers. There will be more pain. "Government of India should provide a lifeline to businesses - loans and tax exemptions for small businesses and self-employed to retain employees," cites the words of former RBI Governor C Rangarajan. Provide direct assistance to affected industries and provide more funds to states. , Tax exemption for houses, etc.
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