Indian economy after COVID-19: challenges and a way to progress

This year’s great COVID-19 catastrophe, as well as the siege, had also brutally shaken India’s economy. The outcome was a further spike in India’s unemployment numbers and a descendant in the Gross Domestic Product (GDP). The International Monetary Fund (IMF) had predicted that perhaps the Indian economy’s GDP is expected to fall by 4.5% in 2020 and 6% in 2021. To have the economy back on track, the Government of India and Reserve Bank of India (RBI) initiated various steps that included new policies, reforms, stimulus plans, bank loans, and infrastructure investment proposals, and so forth. No denying all these measures were appropriate although, during such an unpredictable situation, on-the-ground execution and support to meet the vulnerable are critical. These steps are needed to raise the appetite for usage that has been depressed by the lockdown.
Regional economic overview
Service Sector:
The country’s economic unlock phase has started. The effect of the same through the service industry sectors has also been observed this implies sectors like Fast-moving Consumer Goods (FMCG) will execute well, while virtual demand will perform above expectations. In comparison to their last year’s growth and performance in the coming year 2021, e-commerce, retail, energy, mobile devices, and crude oil would undertake on average. It would also be challenging for industrial sectors such as ride-hailing or car service, hospitality, automotive, aviation, and property development to preserve their buzz. Besides, it should not be overlooked that this is still early stages to assess the growth of demand or demand downturn without having to wait and see how it ends up going for one or two months. Most IT businesses have pursued work from home (WFH) mostly during the lockdown in the service industry and are likely to persist in pursuing it in the head as well. Many of them see this choice as a critical alternative as it has spared these businesses’ considerable operational costs.
Manufacturing sector: After the unlocking phase has also been started, there are tremendous obstacles confronted by manufacturers. It involves obstacles like increasing prices, and relatively low to no wages leading to a lack of workforce due to a drop in output level, markets are not entirely accessible, so restricted sales; workers were instructed to make provisions for employees or workers to remain at the manufacturing facility. That is the situation of a business that has been developed. An essential part of the manufacturing industry, small, micro (MSMEs), which are likely to experience more operating difficulties, must not be overlooked. The Non-Performing Assets (NPAs) loan guarantees and lending facilities are given to MSMEs are more or less bank-centered and pay very little attention to the basis for cash to MSMEs to revive their business, pay wages as well, like other operational costs.
Agribusiness: COVID-19 has helped everyone to redesign the infirm agricultural sector and over the years for different reasons: lack of private investment, water shortage, inequity in executing various guidelines on the field, hurdles in marketing and selling. The growing instability of peasant people is the product of all of these problems. Of all these issues, a range of reform measures to resolve the post-COVID-19 economy was discussed by the Government of India during the implementation of ‘Atmanirbhar.’ A new central policy will be enacted, according to the statement, to provide hurdle inter-state exchange in agricultural produce and to allow farmers more flexibility to sell directly or perhaps even online. This eliminates the limitation on farmers from selling their goods or products in the nearby market committees for agricultural produce (APMCs) and allows them to sell their products in any part of the world. In a way, this move would benefit farmers, reduce their insecurity, and raise their profits. Nonetheless, farmers will have to pay the extra cost of shipping that may not be feasible for all farmers, incredibly small and marginal farmers. In such situations, collaborative transport or two or three or more farmers can choose to pool transport services together to reach market opportunities in other cities and towns to minimize the costs incurred by several of them. Given the differences in the challenge affecting every sector or business, this will take time for the Indian economy to adapt to a new norm. Besides that, it will take some time for the steps taken to drive the economy forth to unravel completely. Their effect can be seen over a certain period once initiatives and policy changes have already been enforced. We certainly have to keep going forward though we also need to be careful, as every measure taken in a rush may not give us the anticipated result because of the economy’s uncertainty. Presently, therefore the emphasis must be on enduring such turmoil.
(The author is a freelancer. Views are his own) [email protected]