Indian Economy 2020: Ups and Downs

The Indian economy was at its best until the pandemic took over the world. In January, there was a sharp rise in industrial activity even making it to Asia’s third-largest growing economy. Currently, the Indian economy along the economies of the world is facing a huge blow due to Covid-19 spread. 

How The Indian Economy Was Before The Spread Of Covid-19?

The Indian economy was at their all-time best at the beginning of the year. Here is how it was performing in different fields.

Industrial output

The activities of the manufacturing and services industry saw a seven-year high in January with the PMI index of 55.5. A reading above 50 in the PMI Index shows expansion and growth. Some stronger inflationary pressures were also seen in January with a rise in input costs and two-year high price inflation. 

Exports

Exports at the beginning of the year weren’t that impressive either. They fall by 1.7% as compared to the previous year. This was because the world was already witnessing the spread of coronavirus resulting in decreasing exports of gems and jewellery. It disrupted the global supply chains and global demand as well.

Consumer Activity

Consumer Activity includes the capability of consumers applying for loans and other related spending. So, consumer activity also showed a sluggish trend with five years low with consumer situation index falling to 83.7. There was less demand and sale of the domestic passenger vehicle. 

However, loan growth rose to 7.1% because of lower borrowing costs but still didn’t witnessed as much growth as compared to the past years. 

GDP Growth

The estimated GDP growth for the year 2020 was expected to be 6.6 percent which was later forecasted to be 5.5 percent only. However, in reality, the GDP growth for the year 2019-20 turned out to 5 percent only which is the lowest in the last 11 years. 

Indian Economy During and After Coronavirus Spread

An already worse situation has worsened after the spread of coronavirus spread. The Indian economy is facing huge backlash following the lockdown of more than 2 months to prevent the spread of coronavirus. 

Starting from the unemployment rate, it rose from 6.7 % before lockdown in March to 26% on April 19. On average, 14 crore people lost their jobs following this. Some of the major companies of India are under shutdown which shrank the industrial output by 1.4%. 

The demand in the country is highly affected by a downward trend in private consumption spending of the country. With India still struggling the wrath of coronavirus and at the same time getting back life on track is indeed a great task. With problems like

• Migrant laborers struggling to afford a day’s food and dying on the roads and trains due to hunger
• Confusions ahead of Unlock 1 related to e-pass requirement from to and fro from Delhi
• Poor and non-salaried middle class risking their lives to earn their livelihood by getting back to their businesses
• Ban on foreign and domestic travel with a loss of 10000 crores of taxes on a single day of lockdown.

It is indeed a challenge to revive back the economy. Despite the circumstances, it’s still the need of the hour to take some altering measures and actions. Here are some of the measures that can be undertaken.

Measures to Revive the Indian Economy

Support the growth of MSMEs

The only thing that will benefit in the long run is the growth of MSMEs. Central and state governments should work together to prioritize the growth and development of MSMEs. They should come up with better opportunities to revive their existence in the country. 

They should be provided with adequate capital and quick financial means to encourage their growth in the areas where the spread of coronavirus is minimal. 

Channelize funds to small firms

The large firms should help out in challenging funds to small suppliers by raising money through bonds. Doing so will make it easier to get corporate borrowings. Moreover, all the PSUs and agencies should be asked to clear their dues soon to utilize the money in private sectors. 

Support established businesses

To support the wage employees of the businesses, the government should provide them with wage subsidies directly crediting to their account through digital payments. This can further be used for the future record for the businesses to keep a record of their workforce. This will help businesses in retaining their workforce in this stressed situation.

Focus towards reopening of schools

It is the high time along with preparing everything according to the Covid-19 needs, schools should also be ordered to start preparing themselves accordingly. Especially the less privileged children should be taken care of by providing them with quality education. Schools should follow proper safety measures as well. 

This was all about the Indian economy before and after the spread of coronavirus and how government along with the help of Indian citizens should help in keeping the Indian economy steady.