The COVID-19 outbreak is being witnessed all around the world with almost two million deaths and more than 26 million positive cases across the globe. With the global pandemic spreading in India with more than 21 thousand positive cases and 681 deaths reported so far, the state has declared complete locked down and curfews across the country and this is certainly a terrifying situation for the country and its economy.
The economy was already slow with GDP growth at 4.5% in the September 2019 quarter which was the slowest in over six years. Modi government 2.0 estimating a $5 trillion economy seems to be an unachievable dream if the condition gets worse. India was already underperforming when coronavirus turned up. India is the second-most populous country in the world and its growing economy now has the risk of coronavirus.
Countries all over the world, including India, are experiencing economic downfall and this may lead to a global recession.
India was left with no other solution than to impose a lockdown as we do not have healthcare capacities like US and China, but this lockdown will certainly have a negative impact on demand of goods by restricting people’s purchasing. This pandemic has made the travel, tourism and hospitality industries to suffer huge losses. It is also affecting real estate, banks, which could lead to a credit slowdown. This could have a negative impact on all industries, leading to unemployment in future. As Asian Development Bank has said, India may lose $387 million to $29.9 billion and the uncertainty has already made the share market hostile.
There are some solutions which may stabilize the economy after this pandemic, such as lowering the interest rate which can create demand. Fiscal stimulus is also a way to revive the economy. A financial aid package to aviation and tourism would be needed, suspension of loan repayment and delay in recognition of NPA should be applied to all major sectors affected by the COVID -19.
Bold, hard and big decisions only can revive this economy which is suffering from a serious health crisis.