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COVID-19 has brought with it global vulnerability, not only to affect the health but also to hit the global economy, the aftershocks of which are yet to be felt in totality. As anxiety and uncertainty rise, everyone is speculating how badly our economy will take a hit because of this.
Economic Recession on the Rise
COVID-19 has taken over the world like malware in your computer system. The government playing its part towards the nation announced a three-week lockdown that could downturn the economic scene of India.
According to an estimated study, one day of lockdown may bring in a loss of INR 500 million due to the stoppage of the production of goods and services. This results in a loss of GDP amounting to 10 Lakh crores in Indian rupees during the 21 days of lockdown.
IMF (International Monetary Fund) chief Kristalina Georgieva recently said this pandemic is driving us towards the worst recession ever. The impact is expected to be larger than the recession of 2009.
Slipping Job Market in 2020
This is one of the significant shutdowns in the history of India. Each sector is likely to be affected either directly or indirectly. There seems to be no escape from it; the experts believe that even after the lockdown is lifted, the comeback is expected to be slow. Therefore, it may take at least six months to revive the economy, but only if we can put this virus to sleep forever or contain the disease.
In the wake of the ongoing lockdown, many companies are calling for pay cuts ranging from 20% to 50%, depending upon the work sector. The most affected industry at the moment is the aviation industry. Many aviation staff is at the receiving end of the impact. For instance, airlines like Indigo recently announced pay cuts, and Go Air lay off many ex-pat pilots. If things don’t improve within the estimated time, there are possibilities of layoff drives in this sector.
The aviation sector is not alone in the grip of this economic recession. The most affected sectors also include Tourism, Hospitality, Agriculture, Automotive, and Consumer Durables. The most affected section from the lower tier is farmers. The stoppages in the movement of goods have led to produce getting fewer prices.
Restaurants, malls, roadways, and railways are also witnessing a downfall. The fear factor of spreading of Coronavirus is likely to continue and hit these sectors majorly. Moreover, the real estate sector is expected to be impacted, as well. This footfall could further be devastating for daily wage workers. So, in the next four to six months, we can foresee layoffs, and a rise in the number of unemployed.
Government’s Course of Action
The capital expenditure from the government will be marginal as the lockdown will result in no income in the form of GST, customs duty, road tax, and corporate tax. Instead, the government may have to depend on borrowing to meet the deficit.
This is how the coronavirus lockdown will affect the economy, leading to the number of layoff drives, retrenchment, pay cuts, delayed salaries, etc. Now, the government will have to take measures to combat this crisis and alleviate the financial pain to support the marginal workers. Subsidized food, free healthcare facilities, cash transfers, giving a levy on paying off debt, etc. are some of the measures that the government will come up with to tackle the situation. For instance, our Finance minister Nirmala Sitaraman has allocated 1.7 Lakhs crores under Pradhan Mantri Garib Kalyan Yojna to address the COVID-19. It includes cash transfers, a free supply of cooking gas to the poor, insurance cover of 50 Lakhs rupees to health care workers, and food security measures.
Despite all the measures, the Indian economy is likely to suffer as the exports and imports will go down. India largely depends on China and South Korea for electronic goods and mobile phone markets. Given this dependency and the rising concerns over the job, India must now think in terms of “Make in India” goods in such sectors. It might open up new avenues of employment in the country. It seems to be a tough fight, but we can sail through it if the government comes up with the right measures.
The longevity of the crisis would help us better into getting insights into how badly this will affect all of us. How many of us will be left without jobs and businesses, or probably see a boom in the digital marketing or healthcare sector! We, as an economy, can only hope to contain this deadly Coronavirus at the earliest by following hygiene and social distancing. Also, we hope for a quick and better revival of the economy and desire to create more employment by the end of 2020.
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