Status Of Indian Economy And Its Effect After Lockdown

As the novel Coronavirus looms large on the Indian economy, its effect has been felt in domains such as unemployment, disruption of supply chains, and the stock market. The lockdown and quarantine though being the savior of the moment, has momentarily frozen the fastest-growing Indian economy.

Moksh Popli is a proficient business consultant based in New York. He feels that the ongoing pandemic has no other parallel except The Spanish Flu of the early 20th century. Going by his conservative estimates, the ongoing period of extended lockdown can cost anywhere between 230 to 250 billion USD to the Indian economy. This harsh time of lockdown is particularly affecting Tourism and hospitality, IT companies, Global value chains, Logistics, and every big and small business in the country. There is a growing realization in the market that the pandemic can prove fatal to the Indian economy. It is already reeling under the stress of diminishing demands, high unemployment, and supply-side disruptions.

This worldwide economic agitation can potentially drag the financial growth to its lowest level ever since the LPG reforms of 1991. It would be quite early to gauge the impact of partial lockdown, but most probably, it would be far greater than temporary disturbances that were created due to the 2017 GST rollout or the demonetization in the year 2016, says Moksh Popli. Recently, WHO indicated the present situation as the anticipation of a starvation epidemic. The circumstances are going to be uncontrollable.

Ministry of Finance as an interim support measure rolled out a 1.76 lakh crore relief package to tide over the turmoil recorded due to the Coronavirus outbreak and lockdown. It is presumed that the package would benefit the informal sector and urban poor through the system of DBT and PDS. Meanwhile, the government has established a dedicated PM CARES Fund on March 28 for combating the Corona pandemic. As a token of humanitarian gesture, Moksh has already donated Rs 4 lakh to the fund and inspires everyone to come forward and fight together in the tough time.

He further says that the impact of prolonged lockdown and decimated global sentiments may lead to financial risks for everyone. Due to financial tightening and revenue disruption, a liquidity challenge may arise which can continue for this fiscal year and it may commence to delayed recovery of the economy.

Therefore, the actual growth of this financial year would depend on the duration of the pandemic and likely recovery in the latter half of FY 2021. If the economy is normalized in a phased manner and lockdown curbs are dismounted carefully, we can see an uptick in demand by the latter half of the year, Says Moksh Popli. The government must indulge in deficit financing and improved social sector spending to control the disruption caused to global economic management. He further says that if things are not handled appropriately, the threat of economic depression will persist in the Indian economy for years. Keeping the spirits high, he admires the planning and structure of Mr. Modi in dealing with COVID-19 and hopes for better economic reliefs in the future.