As the coronavirus pandemic continues to wreak havoc on precious human lives, the country’s economy, too, is worsening day by day given the output gaps and the price spikes. Furthermore, it seems that both these situations have no immediate or ready solutions. If on the one hand there is a complete absence of an antidote to control the virus spread ably, on the other hand, there is no magic wand to bring the derailed economic conditions on track either.
What is being done by the policymakers merely looks like an empty exercise. Yet, we believe in their endeavours and regard them as a meaningful push for the sake of much-expected monetary and fiscal growth. The government’s measures and policies seemed to be comparatively normal before the swift spread of the hydra-headed spectre of novel Covid-19.
In a recent detailed, informative and objective analysis put up by a global analytical company, it has been emphatically explained that there is a large probability of sudden appearance of bad loans for the banks without bringing to fore its exact number. Therefore, the NPA fuss cannot be avoided in this far more critical period.
The existence of near-term liquidity crucially ensures timely servicing of debts. This is so because the businesses are taking a little longer to adjust to the fast-changing virus-ridden environment. It so appears in the view of the deadly toxic virus attack that the businesses have not been breathing its usual pulse. What has been widely suggested by the economic experts in such unfavourable circumstances is that only a blend of monetary and fiscal boosters can help the economy surmount the deepening impact of the pandemic.
Output gaps are commonly defined as the proportion by which the actual output of an economy falls short of its potential output. And the price spikes are also supposedly considered big hurdles in balancing the economic direction. In the best-case method, supply-chain normalisation is believed to improve only by May-end, provided China could control its death cases.
If it is not attended to properly, as is presumed, vital sectors like engineering, gems and jewellery, steel, construction and textiles are going to face an unavoidable brunt of the impending situation. Looking at the unexpected scarcity of mid-term liquidity, support is also required to more sectors like airways, restaurants, malls, hotels, multiplexes, and retailers, as these very spheres are at a high-risk owing to the steepest revenue loss.
Not only those tracts that are vulnerable but our exports will also be disturbed badly if everything moved in such a contrary way. The close recession-like situation in as many as 15 countries will be assessed as external alarms over our badly impacted economy, as the methodically researched reports illustrate that these 15 countries provide 64% of global GDP.
The scrutiny does not end here, but it further informs that the 15 countries are contributing at above 60% of the global business and 45% of our trade too. It is not wholly irrelevant here to add that these nations are also the country’s trading partners with the US, Germany and China alone contributing to 30% of our exports at 17%, 10% and 3% respectively, and to 29% of our imports at 7%, 19% and 3% respectively.
These figures point at the economists’ trouble in the projection of the fair forecasts. In the meantime, Congress Rahul Gandhi said a big financial package needs to be given to revive the economy. Clapping will not help small and medium entrepreneurs and wage workers. What is urgently required is cash flow, tax sops, besides relief in repayment of loans.