Hyderabad: Last year the Covid pandemic had severely damaged the world economy. India's Gross Domestic Product (GDP) fell by 24 per cent in June 2020 due to the lockdown.
Revenues and savings declined. Unemployment has risen. With the financial assistance of the governments and the relaxation of the lockdown the situation gradually stabilized and showed improvement.
By December 2020, there were indications of the recovery of the economy. National and international organizations also predicted that India will record double-digit growth in 2021. The country's economy is once again in turmoil as the second phase of the Covid erupted.
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The leading rating agency (Nomura) has forecast that as against the 13.5 per cent growth predicted at the beginning of the year, the GDP growth will now slow down to 12.6 per cent due to the continued onslaught of the Covid.
JPMorgan and UBS also cut their expectations from 13 per cent to 11 and 10 per cent, respectively. Moody warns of the second phase threat' to India's economic recovery.
The curse on the poor
With millions of Corona cases being reported every day, state governments and local agencies are enforcing lockdowns, night curfews and other sanctions severely affecting the livelihood of the common man. People are unable to continue their activities due to the severe panic created by the non-availability of required beds in the hospitals, medical equipment, life-saving oxygen, etc. required by the population of the country.
Although the Covid vaccine was discovered, it has so far been given to less than ten per cent of the population. The recent 'Consumer Confidence Survey' conducted by the Reserve Bank of India also proves this. It revealed that the spending on unnecessary items will be reduced. The rate of inflation increased significantly after the Corona boom.
Declined income due to loss of employment on the one hand and rising prices of essential commodities on the other, are having a severe impact on poor people. The agricultural sector is registering a positive growth rate in the Indian economy. Foodgrain production touched 30.33 crore tonnes in 2020-21.
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For the fifth year in a row, the production has increased at a record level. However, extensive work needs to be undertaken to procure and distribute essential food items to all parts of the state. Food supply and money transfer should be made accessible to all with the ‘One Country One Ration Card’. The Rural Employment Guarantee Scheme has registered 384 crore working days for the year 2021.
This is an increase of 45 per cent compared to last year. There is a need to increase the level of work for skilled and unskilled migrant workers. Providing basic infrastructure such as building agricultural markets and rural housing through the Employment Guarantee Program will help reduce long-term migration. If governments respond quickly and take steps to make the Corona vaccine available to all, people will be able to continue their day-to-day activities, thereby boosting the economy.
The financial condition of the state governments has become miserable in the wake of the Corona crisis. The central government has been pursuing various avenues to increase revenue and could reduce the financial loss to some extent. By providing large-scale assistance and cooperation, the Centre can help the States reduce their financial loss to some extent.
Self-control is crucial
Tourism, hospitality, aviation, entertainment, automobile, real estate, construction, etc., were severely affected. These sectors account for a significant share of GDP. These are likely to take a long time to regain their former glory. As the incomes of people employed in the unorganized sector continue to shrink significantly, it is likely to have a major impact on the economy. These sectors have not seen a revival to this day.
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Currently, the low-interest rates on bank loans are creating some relief to the borrowers. Falling credit rates will boost debt growth so that it is possible to see that there is no shortage of demand in the economy. Permission for political and religious activities needs to be banned to curb the spread of Corona. Covid rules should be widely publicized among the people and those who flout the rules should be penalized severely.
Awareness programs should be conducted to adhere to physical distance, wear masks, and sanitize properly. Corona spread can be controlled if people exercise self-control. If another lockdown has to be imposed again - the damage will be severe. Everyone should realize that there will be no need to impose a lockdown if they continue their daily activities with due diligence and care.
