The lockdown of an entire country of over 135 crore people seemed quite unrealistic & unanticipated at first thought, making it frightening when it actually happened.
At the very beginning, it was truly peaceful– our streets had seldom been so open and deserted in the middle of the day.
This ‘lockdown’ has been the most unprecedented yet crucial measure that has slowed down the impact of the inevitable, by bearing a crude mark on the nation’s economy.
But, the Indian economy was in its worst phase even before the coronavirus outbreak, with growth in the gross domestic product (GDP) falling to an 11-year low of 4.2 per cent in 2019-2020. The pre-crisis unemployment was also a record high & pretty concerning.
By 2019, India began suffering systemic economic slowdown as national consumption and investment bottomed out. Growth rates plummeted to 42-year lows before COVID-19 struck; the pandemic shattered whatever was left.
In a developing economy as large as India’s, contraction is a rarity. The last instance of negative growth for India was from 1979-1991, the time when India survived the greatest drought since Independence, a price war, “Balance of Payments Crisis” (meaning India was not able to balance its accounts — exports were significantly less than imports).
This catastrophic economic crisis could possibly lead to the “reversal” of all gains since then & to even begin to determine the countless ways in which this is going to affect all of our lives isn’t easy (or possible for that matter).
While the RBI didn’t give out exact predictive figures as to how much our GDP was going to be affected, Goldman Sachs (a leading American Multinational bank) predicted that our GDP growth is likely to shrink by 5% in the financial year (FY) 2020-21.
The fact that most countries across the world are going to enter a period of recession might seem prevailing in context to a country such as ours, but it is actually even more concerning.
Even before the pandemic, India was grappling to provide its youth with proper employment opportunities, the highest loan NPAs (Non-performing Assets) were registered by banks in the education sector. Multinationals & brands like Raymond, Swiggy, H&M had laid off thousands of employees either as a complete lack of empathy, or lack of choice. India’s public debt-to-GDP ratio is projected to reach about 84 per cent this fiscal year. A retreat of foreign portfolio investors (FPIs) & the added decline of exports doesn’t look good for India considering the difficulties that lay ahead for all of us.
The uncertain change in consumer taste & income levels is a proof how the sharp fall in PFCE (Private Final Consumption Expenditure) in the June quarter to 3.1 per cent compared to 7.2 per cent in the March quarter has aggrandized this situation, surrounding us with uncertainty.
Even the outlook for the world’s poorest looks grim unless governments do more and do it quickly, says a United Nations University report. The result of this unparalleled loss through mere droplets is that the progress on poverty reduction could be set back 20-30 years and making the UN goal of ending poverty look like a pipe dream.
There is enormous, perhaps unprecedented, economic pain ahead, despite the “enormous” relief packages announced which are, a necessity but setting us up for failure in the future without any stringent measures or policies.
The trajectory of a silver lining for India is, “opportunity” — this entire scenario has certainly opened up some clogged drains & closed doors for the Indian economy as well.
World-class economies are now looking out for low-cost outsourcing solutions. Whether it is IT, finance or non-core items, India can rise up to the challenge as it has done in the case of FDI (foreign direct investment) by offering land twice Luxembourg’s size to firms leaving China in an effort to boost FDI, creating possibly countless jobs in the future to ease the burden on our economy.
The National Education policy too is long due change in an effort to ramp up our skills training and vocational training initiatives. This paradigm shift in our education system will allow schools and universities to emphasise on critical thinking, creativity, communication skills, and emotional skills (EQ) in the new skill-based world that has risen out of the need to thrive, however, its execution is still what the world needs clarity on.
Considering the difficulties of the present, the time has finally come for humans to overcome their undying thirst for power and supremacy, and utilize this opportunity to create a just operating space for humanity by investing in renewable energy resources and economic models on doughnut economics.
– Jasmann Singh Narang, K.R Mangalam World School, Vikaspuri1 Like