India has been the center of trade, business and exports since the beginning of civilization. As of now, India’s GDP(PPP) per capita ranks 3rd with $11,321,280 million, according to the International Monetary Fund (IMF). The economy was predicted to contract by 4.5% in 2020. However, the silver lining the projected growth at a rate of 6.0% in 2021. This sharp changes in the economy can be attributed to one main factor, the Covid-19 outbreak.
Due to the unexpected devastation of the Covid-19, abandonment of developments has led to a distressed economy, left banking systems in pain and consumers too worried about the loss of jobs and rising cost of living. But it is during difficult times like these where problems have been piling up that there is a need for solutions to evolve and be implemented to resolve every issue one by one and reduce the looming premonitions.
First, the largely disruptive impact of Covid-19 on the Indian Economy is indicated down below:
- Loss of funds has damaged young startups
- Unemployment has a sharp rise.
- Supply chains have been stressed out
- Government income decreased
- Tourism industry has collapsed
- Hospitality industry has shrunk
- Reduction in Consumer activity
- High rise in LPG sales
- Decrease in Fuel consumption
COVID-19 pandemic has induced market instability and lockdown which resulted in the fourth and largest recession in Indian history. However, to cover from it we need to understand the philosophy and mindset of the people of India and its government. According to the ‘Edelman Trust Barometer’, the poll showed that 64% of the people agreed that the precedence is to shop as many lives, and 36% agreed that saving jobs and restarting the economic system was. In the beginning of the lockdown, Prime Minister Modi went with the same philosophy, addressing to the nation with “Jaan hai toh jahaan hai” (which translates to: Only if there is life there will be livelihood). Prime minister Modi held a meeting with the Chief Ministers on 11th April 2020, in which he said “Our mantra earlier was jaan hai toh jahaan hai but now it is jaan bhi jahaan bhi (which translates to: Both, lives and livelihood matter equally).” This mentality now forecasts that the Indian government will give importance to both saving lives and improving the economy.
Steps taken to improve the Economy:
Prime Minister Modi proposed Atmanirbhar Bharat (self-reliant India) for the duration of the assertion of the coronavirus pandemic associated monetary bundle on 12 May2020. This is to make India more independent and less reliant on other countries during any situation. This doesn’t mean seclusion from countries, as the Finance Minister clarified, “self-reliant India does not mean cutting off from rest of the world”.
The Economic Package Announcements that took place between 12-17 May were the major draws for the steps taken to improve the situation for businesses and livelihoods. The announcements were made as follows:
- 12 May: Overall economic package of ₹20 lakhcrore was disclosed.
- 13 May: The financial package was elaborated by the Finance Minister and the Minister of state and corporate affairs. The definition of MSMEs was revised to allow more companies to avail the benefits of MSME schemes.
- 14 May: The Finance Minister continued announcing for the second day on the details of the economic package.
- 15 May: The finance minister continued the announcement of the economic package for the third day. The extension of Operation Greens was enacted and the amendment of Essential Commodities Act (1958) was proposed along with the Matsya Sampada Yojana, for fisheries and animal husbandry infrastructure fund was announced.
- 16 May: The Finance minister continued the announcement of the Economic Package for the fourth day. A fund for farm-gate infrastructure became announced, amendments to the Essential Commodities Act, as well as the opening up of the defense sector, power sector and space sector for privatization.
- 17 May: The announcement of the economic package was concluded by the finance minister.
This economic package came with reforms, infrastructure building, certain amount of direct cash support and support to stressed businesses. The country has also been projected by experts to have a slow recovery in its upcoming economic stands and by the policies implemented so far.
Other approaches to enhance the economy:
Increased Agricultural Growth:
With 44% of the labor force occupied in the agricultural sector and having 52.62% of arable land, which means half of India’s land is capable of growing crops and nearly half of its labor force is employed there. The government should focus on training people with better technology and funding more R&D based opportunities for farmers and young students to learn and work from.
India exported $38 billion worth of agricultural products in 2013, while the Netherlands (a country 79 times smaller than India) has been exporting $75 billion worth of vegetables, fruit, flowers, meat and dairy products each year. India can also radically improve its agricultural products by growth of A.I. and Automation and providing technical support to the youngsters who wish to farm.
Foreign Direct Investment:
Foreign direct investment should be encouraged and permitted only in those sectors Which might notably make contributions to employment creation, earnings era and internet export earnings. Legal right should be given to multinationals to invest without any interventions of the State, which is envisaged in the proposed (Multilateral Agreement on Investment), should not be acceded to, under any circumstances.
Investments in Renewable Sectors:
By 31st March 2020, India’s Installed electricity generation capacity accounted for 35.86% from renewable sources. 21.22% of total utility electricity in this country was based on renewable energy source. India is already a huge producer energy by renewable energy source. The gap caused during COVID-19 can allow the transition to take place for India to rely less on the non-renewable sources and improve the cleanliness and livelihood of society by cutting down on the emissions.
Already wildlife and nature have shown great progress where waters have become cleaner, due to lockdown The Ganga is easy, in a few locations so easy as to be healthy for drinking. Vibrant marine life is visible in the water bodies and in the ghats of India after a long time. This was not possible before due to high levels of human intervention and pollution into the river. Now, that the effects of pollutions have decreased, we must find alternatives and maintain the reduction of pollution by investing more time, money and efforts in renewable energy.
During the 2008-2009 recession, South Korea made the stimulus towards green measures where it increased to 70%, compared to other economies in the Organization for Economic Co-operation and Development (OECD) Korea had the fastest recovery.
Relaxing financial conditions:
The macro-financial package post Covid-19 could trigger a growth cycle, by raising propensities marginally and allow it to Spend above the ones to store it, as call for is saved a step beforehand of slow rest in deliver constraints. Global shocks can be potentially stagnated by activating India’s large domestic demand and prolong shrinkage of trade.
Financial risks can be reduced by improving stability of the macro-financial by careful calibration. Across the world, new liquidity infusion is being followed in quantitative which eases the risen up asset prices. Credit due to Ponzi-type leverage on asset value has led to risks. A large financial shock could be creating because of the collapse of stretched assets. Low credit growth has led to loosening of financial conditions.
Even though this is India’s worst hit medical pandemic so far and its lowest point in economic history that lead to its fourth recession. The future of India’s economy is bright with various opportunities for it not only sustain but grow and this has been backed up by many experts.
The government of India has to plan and structure its investment and improvements of various sectors to be able to create jobs and better livelihoods for the generations to come. This is important for the people as well who should learn from this experience and change their motives and way of life.