Indian Economy After COVID 19

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The entire world has witnessed the very unfortunate   COVID-19 crisis. Lives were lost on a large scale, people lost their touch with the outside world, humanity got distanced along with which development and economy underwent huge alterations. Everyone has an understanding of scarcity whether or not they are aware of it. Scarcity explains the basic economic problem that the world has a limited amount of resources to suffice seemingly unlimited wants. This forces people to make decisions about how to allocate these resources in the most efficient way, so that maximum possible priorities are met. This is basically the role of an economy.

Economic issues greatly influence our daily lives. It includes tax, inflation, interest rates, emerging markets, etc. Economics provides solutions to a wide range of health, social and political issues whose impact ranges from every household to wide communities. This makes it extremely vital for us to understand the changes that the Indian economy underwent during this global health disaster.

A key feature of India’s economic growth performance after 1947 was that it’s economic growth averaged about 3% per annum. However in the second quarter of 2016-2017,  the growth rate began to fall. The major reason for this decline was demonetization. Even prior to the pandemic, Indian economy was marked by slowdown of economic growth. Hence, India’s capacity to deal with this new crisis was weak when the pandemic hit in March 2020. Strict lockdowns became necessary in almost all countries. Economic activities came to a halt. As factories, companies were temporarily closed, production of goods and services declined and supply chains were severely disrupted. Due to shut down of economic units, people lost jobs, wages and aggregate effective demand also fell.



India suffered two severe hits by the COVID-19 wave. Initially, the situation was seemingly controllable but in the second wave, we found ourselves in the need of oxygen and other medical supplies. Initially, India underwent a prolonged lockdown. Manufacturing and urban economy had come to a halt whereas rural economy continued to move due to lesser cases and less strict lockdowns. Hence, agriculture being the prime driver of the rural economy, provided employment to 58% of the population and kept growing. Reflecting on the GDP (Gross Domestic Product) figures, agricultural economy increased by 3.4% and overall economy contracted by 7.7%. However, in the later stage, cases in the rural areas were found to be increasing.

About 40% of India’s total non-farm work force is engaged in micro, small and medium enterprises (MSME). It was  the MSME sector that the impact of lockdown was most severe. There was a fall by one-third in the total Goods and Service Tax collections in India between February and April 2020. Total quantity of revenue-earning freight moved by the Indian Railways was lower in 2020 compared to 2019.

The economic shutdown after March 2020 led to a major rise in unemployment .  There was some recovery in May 2020, but the total size of labor force in October 2020 was still lower than in February 2020.

As we are moving into a post COVID dispensation, India will have to prioritize economic expansion and sustainability. It is now clear that the pandemic has brought the world to a major economic and financial crisis and is likely to have long term repercussions. In the same period, the world also witnessed exponential growth in digital services and infrastructure and the adoption of large scale work from home arrangements.

Despite the economic devastation caused by the virus, India’s agile response has been commendable, especially as the country which rallied to manage a deadly second wave of the virus. India quickly swung into action to ensure that as many people as possible were vaccinated. Amidst the ongoing volatility and change, India has a rare opportunity to address not only the short term public health challenges but also to become an important axis of power and influence in the post-COVID  world. The citizens stand with India in it’s efforts to assume new leadership roles to help guide it’s economy into a brighter and more sustainable future for all.



Credits and References:

Janhavi Kulkarni (FY, ENTC) Team Thursday Awareness



http://www.scielo.org.mx/scielo.php?script=sci_arttext&pid=S0185-16672021000100003


https://theprint.in/india/indias-economy-and-sustainability-are-key-to-the-post-covid-19-world-wef-president/764814/ 


 

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