- MOULI DAS
What we had seen in the budget and the pronouncement of past few months was India’s stab at rolling down economics.If firms have a lower tax burden, they will hire more people, the thinking goes. If individuals pay less tax, they will spend more and stimulate the economy. But all of a sudden its was all dismayed by the SARS COV2 VIRUS with its uncontrollable covid-19 attack.
Institute of Supply Management (ISM) report gives a clear picture of monthly economic review. Analyzing the statistical data of March it can be said that COVID-19 recession has arrived. ISM index for the nation’s manufactures has decreased in March to 49.1% from 50.1% in February whereas production index has decreased in March to 47.7% from 50.3% in February. Decline in manufacturing index and production index below 50% indicates contraction of the respective sectors.
Hence, in India this recession affects the industrial sector most, where energy sector are the obvious loser as because they suffer often whenever economic activity slows down. The corona virus pandemic gave shock to the global energy market.
To cure this pandemic lockdown is the only option as suggested by government as well as the International bodies but this affects the supplying sector too. Furthermore, consumption demand, the base of the Indian Economy, will also decline because of collapse of incomes and private investors will be shaken. Besides banking, which is going through loan crisis and finance sector will be in a deep distress and insurance companies too.
Coming to the employment sector, according to ISM employment index registered 43.8% in March compared to February reading of 46.9%. In India, apart from agricultural work force huge mass of workers will have no livelihood during the lockdown period. So there is a possibility of increase in poverty. From the instance of migrant workers walking several hundred kilometers back to their villages give indication to the crisis they are facing the most. So a complete lockdown can give foul to the economy. During the period of lockdown the supply and distribution of essential goods and services should go on. It is utmost to assure their continued production. From macroeconomic perspective currently Indian economy needs to be stabilized for that demand and supply should sustain. Hence, adequate measures needs to be adopted fortunately some state governments have come up with necessary measures like in West Bengal, Delhi, Kerala, Rajasthan, Odisha and others. Still measures are not functioning properly as they are all cash- strapped. It is central government’s responsibility to provide funds to the state governments and also to co-ordinate with them for proper allocation of resources, with this it is also important to ensure proper supply of essentials.
Demand and supply needs to be balanced as soon as possible otherwise supplies may shrink and shortages will emerge taking a gigantic shape and economy can be at a high risk. This will led to widespread unemployment and poverty and even social and political unrest.
The time has came for the Indian government to realize that this health pandemic should not turn into an economic one so that it goes beyond repair.
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