After coronavirus fractured many economies worldwide, it is becoming difficult day by day for governments to devise effective policies to get their economies back on track. India, with more than 4.5 lac coronavirus cases is facing a disruptive impact of the same. According to the Ministry of Statistics India’s growth rate in the fourth quarter of the fiscal year, 2020 was as low as 3.1%. India had been already experiencing an economic slowdown even before the pandemic struck and this has worsened the situation further. In fact, many conflicting views from various experts have made it tricky to predict how the Indian economy will revive as the challenges right now are complex and unpredictable.
One of India’s top economists Krishnamurthy Subramnian, the chief economic adviser to the finance minister of India spoke to Haslinda Amin at the Bloomberg Invest Global virtual conference and said that once the uncertainty from healthcare perspective is taken care of and if there’s a vaccine at least at the second half of this year, the economy is likely to experience a V-shaped recovery curve beginning from second half itself.
Even if the vaccine is available in the coming year it’s predicted that a V-shaped recovery curve will follow as it can be learnt from the Spanish Flu of 1918, said Subramanian.
Nationwide lockdown due to the global pandemic sent a shock wave to multiple industries especially manufacturing and services which experienced a heavy blow in the beginning of April quarter itself. Even the job market remained in a very underwhelming state and around 14 crore people lost their jobs and several others had salary cut downs.
Initially, the World Bank agencies had revised India’s growth for FY2021 at its lowest in three decades since India’s economic liberalization in the 90s. However, after the announcement of massive relief packages by the governments in May, Subramanian said he is confident that these measures along with a low-base effect will help the economy revive faster.
India’s government declared a Rs 21 lakh crore ($276 billion) package to hold up the economy, which includes easier access to credit for small businesses and cheap loans to workers and farmers. Many other measures like special financing to NABARD, SIDBI and NHB plus altering India’s foreign direct investment policy have been announced but some critics still question the true value of the reliefs announced.
Abhishek Gupta, an Indian Economist said: “The extended lockdown, cratering production, still-rising Covid-19 cases, inadequate fiscal policy support and limited space for further conventional monetary easing mean the recession will be more pronounced than anticipated and a V-shaped recovery out of reach.”
While the government has been on its feet to hold the economy together but still many of the short term needs remain unaddressed. Economists also say that these measures are merely supply oriented which is not exactly enough. However, despite many criticisms, some optimistic and neutral opinions came out too which said that at least the government has been promptly taking steps and their timely cautiousness towards government spending. Many questions remain in the air for some time unless something concrete comes out.