An abysmal economic emergency has been floated across nations ever since WWII and independence of 3rd world countries. The corona pandemic has slayed the world economy within fraction of days. The top developed and developing countries are undergoing unfaltering commitments to keep their respective countries net GDP in a positive value. Talking about the global financial crisis of the last decade, the situation was more fluid as compared to the incumbent one because unlike this time people used to go to work and all the sectors were contributing in the country’s GDP. The financial system was sound and government finances were healthy. But after analyzing and overviewing the precautionary steps taken by the government, the conditions are improving significantly and so as the economy.

Source: Economic Times

Taking the worst-case scenario, we should start thinking about the economy even if the lockdown continues or it allows only those states where the percentage of infection is low. Scraping the lockdown in one go can be beneficial as well as obnoxious. It could be profitable as all the manufacturing sector would be back on pace and the overall GDP will start to rise again whereas it can an absurd decision if proper precautions aren’t supervised across the nation resulting in hike of number of cases. It is advisable to release only those areas where the virus count is less and even after opening up, proper safety gears and precautions should be taken.

The challenging section would be to repatriate the factory workers back to the workshops after a lockdown of 90+ days. It had been a difficult task because as headlined by apex news channels about the controversial stances witnessed w.r.t daily wage workers and how they’d paved/struggled way back home, they needed a concrete and convincing reason to rejoin those factories. Direct transfers of financial aid might be a scope but not for all. The frequency of transfer seems inadequate to see a household through a month. The governing authority should come with some public and NGO provision along with private participation and allow direct benefit transfers to the needy in order to facilitate in the coming days. We’ve already witnessed the penultimate shebang of not doing so and if still not continued, something egregious awaits us.

Source: Rabobank

Access to limited fiscal resources can be a boon and utilizing it in an optimal methodology is the apt solution a nation can procced with. At the same time budget constraints should be tallied across as it could hamper any individual’s salary this very year. Unlike other developed countries which can spend 10 to 20 percentage more of their GDP and reach till negative, we’re already in a negative fiscal point and measuring the scenario, this value is going to sink down soon. A down scaled GDP can lower the chances of investors investing money in any sector or to withhold the newly assigned packages of undergrad or post graduate pass outs.

We’ve to prioritize accordingly keeping in mind the necessary deliverables and budget constraint. The government should ensure the investors and its commitment to fiscal rectitude and holding up the independent fiscal council and assign a minimum term debt target. Not only the MNCs but the small firms have also faced detrimental consequences after the pandemic and the situation is so abysmal that it may not be possible for them to stand again. Optimal alternatives should be considered especially the ones which dominates over the labor and production sector. The government wants to support all the firms at a common rate but due to the crisis, the credit isn’t sufficient to revive anyone completely.

Firms which are well established till date and have the capability to fund these start-ups can also be an optimal way to revive the country’s GDP. Insurance companies, banks and mutual funds should be encouraged to invest on newer grade bond insurances and their grade ease by the RBI lending to these high-quality bond portfolios through repo transactions. However, the RBI act has to be changed in order to enable these solutions to functionable. The government will be requiring myriads of agencies and PSUs to pay their bills so that all the private players gets a valuable equity.

The difficulty faced in household and rural sectors will be reflected upon the economic downfall. The banks had flooded the liquidity and it needs to go beyond it. Mathematically, a greater number of liquidities won’t help in absorb loan losses. The concept of bringing back people who’ve already served the nation is an outreached idea and would benefit in the coming days. In this situation, driving help from the opposition party would also be helpful who’d experienced same crisis before.

Source: Economic Times

A major sector which has been neglected at a greater extent is the agricultural sector. Usually the crops are slashed and collected in the month of march-April. However, due to the lockdown it isn’t possible to send out laborers for the work. If this act fails, a new factor will be added in the pandemic chapter. The economic status was falling before the pandemic and the socio-political environment is slouching down.

Although after imposing heavy taxation in liquor and alcohol which has been an infamous cumbersome procedure to revive the country’s GDP, the overall growth rate is likely to be declined by 5% in the FY 2020-21 according to Goldman Sachs. Even after certain relaxation, some sectors are witnessing dismays because of rent seeking by the major stake holders. For example- the malls were sent to open from 8th June,2020. Some reopened while some not. The major issue being the financial argument for the unit’s holders as some builders are ravenous for the monthly rents while some are compensating by giving 75% relaxation for paying the mall rent.

A large portion of GDP is been bolstered by fiscal deficit/Public debt and the blue-print of same should’ve been orchestrated in the coming days. However, Mr. N. K. Singh, chairman of the finance commission stated the mere fact about prioritizing economic revival over the public debt in the forthcoming days. And the government had been opting such trenchant stances vividly. The commission is also held to strategize a map for a 5-year fiscal consolidation from 2020-21 to 2025-26. The compensation of revenue loss for the GST have been queried from the adjacent demand of the states and its borrowing is been clustered altogether in the government debt with iota chance of neglection. 

Source: Economic Times

The procedure of borrowing by central or state is conducted by the security of consolidated funds of central government and states respectively. The impact of tax collection by the central government had fluctuated alongside the pandemic while the paramount parameters to chart out the procedure was discussed with the Economic Advisory Council (EAC) the previous month. Crafting out a prolific projectile with regards to base year of the commission in a tenure of 5 years were some of the listed issues debated in the meeting. However, dismay can be screened while setting up the base year for FY21 as the overall economy has been plummeted. A maneuver choice would be either to consider year 2021-22 as the base year or recapitulate the witnessed growth rate of the past 20 years i.e. 6-6.5% every year for an immaculate proceeding.

The balance sheet recession is a dismay which is enlarging and in order to maintain a subtle equilibrium, one amongst the government, households or firms either saves the most or spends the most to compact the net economic domain. Policymakers on collaboration with myriads of banks and related agents showcased an adroit step by aiding financial support to the households and firms. Many private stakeholders had cajoled to recover the debt first and then stimulate the new investments even though the graph for economy is stretching out. In order to eradicate the plummeting market in the upcoming days, the private players have to initiate investing strategically in order to capitulate consumer base and bolster the firm’s stances.

As per a vehement statement made by the International Monetary Fund (IMF) with respect to country’s GDP downfall due to the COVID pandemic, it is expected to contract by 4.5% as marked from March 2020. However, the thoughts of Indian officials regarding the shattered economy are isolated and continued to prescribe the incumbent dogmas, making a trenchant statement. A negative shebang is been highlighted as myriads of participants from the working community have experienced pay-cut of more than 35% thereby pushing lakhs of employers into an amalgamation of poverty and pusillanimous. The reputed vision of the Indian economy-built post 1990s have come into a halt. The existing government finances are exhausted and tax revenues are to about to crash leading to a rapid hike in the debt-GDP ratio in the upcoming days. 


In the advent of the global pandemic and India being the fourth highest country to witness, a huge number of protestors demurred the opening up of lockdown as the graph for number of cases are shooting. However, the dystopian scenario had to be face in the coming days aptly in order to eradicate issues like economy dip, jobs crisis etc. Statisticians have come with prolific analysis of the country’s growth/downfall rate taking the pre-pandemic month into the calculation as well. As analysed, the growth rate before the virus outbreak was 4.2% and the overall percentage rate dropped from 7% to 3% as marked recently. However, the stats have started to rise again with a major contribution by the exports domain, as stated by Piyush Goyal, Minster of Commerce and industry.

According to World Bank, one of the major reasons for the economic status shrinkage of India relies in its lack of investment. This is the first time in two decades that its investment rate has shrunk to 3% for the annual year 2019-20. Earlier, there have been significant increase of 10% in the previous year. As per reports, government spending was almost double than the private spending and as the result the fiscal deficit was 4.6% more since past 5 odd years. The leading policymakers are sanguine towards the incumbent scenario as their plans are expected to be conducive for the country’s economic revival and it shall detach itself from the labyrinth corner. An anecdote by lifting the gates of lockdown can be premiered in the rural areas, where the sales of tractors, two-wheelers and fertilizers had significantly contributed towards the country’s overall economy, said Citi Inc’s Chief India economist, Samiran Chakraborty.

The cumbersome steps taken by Government of India to strengthen the rural section of the society by launching related schemes and awareness have finally showered favourable results. A grand investment of 500 billion have been postulated by the government of India across 6 states where the migrant workers repatriated. The investment has been allotted for the next 5 months; however, the source of the very investment is still unfettered. As per Citi, the rural unemployment rate has fallen from 26% to 7.3% last month, showcasing better stances as compared to the urban unemployment rate which is 11.2%. It is also estimated to state that, by the end of the year, rural sector would be more stabilized than urban sector. 




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