The battle to coronavirus pandemic is likely to result in huge job losses, pay cuts and freeze on hiring over the next few quarters, thereby giving blues to India’s already distressed employment story. The casual laborer has lost their income. The service industry like transports, hospitality, maintenance have been shut totally. Manufacturing industries have shut down their operations. Agriculturists are not able to market their produce. Government’s revenue has fallen deep. So, the economy is in a frozen stage. Students are not able to prepare themselves for their future careers. The cost of initiating all the above activities after the lock down period is high and it depends on how well the virus is contained and the people’s preparedness to resume their work. Migrant laborer will find relocation very costly and risky. People would be scared to re-engage them when they return from their home to work. This is biggest matter of concern.
China where unemployment rate in January was 5% and then immediately climbed up to more than 6% in February due to their lockdown of almost 2 months. While in similar context India is in far better position presently where so far people are able to bare this locking period. Arguably in Metropolitans situations are pitiful where larger areas are flooded by labors and workers and drivers which might find this lockdown as biggest threat to their daily expenditures. Indian economy greatly falls down, small businesses collapsed, Indian tourism effected, Govt exams and interviews are delayed. India is already going through a 21-day lockdown period and people are already not cooperating with the government. Small companies finding it difficult to pay salaries for people sitting at home. also, the industrialists / manufacturing units / productions / import / export is finding it difficult to breath because if there is no business. There is no resource and everything has stand still. Extension of lockdown would be required if Coronavirus pandemic is out of control. But this extension will break the moral of people, they will prefer to risk their life over survival. Poorer people, daily wages labor, small business persons, would face major problems. Government has to gear up to tackle the above problem. Because it may give rise to situation robbing shops. People will bash each other for money, the crime rate will go up. Even before the lockdown, which began on March 25, the country’s economy suffered from a prolonged period of slowing growth. For the financial year 2019-20, official estimates peg the annual expansion rate of GDP at 5 per cent – the slowest since the 2008-09 global financial crisis.
It is a harsh reality but the economic impact of Coronavirus would claim more lives compared to medical/healthcare reasons of coronavirus. The Indian stock market has lost more than 35% of its value over the last 30 days. There has been a constant outflow of funds outside of India, which does not auger well, both in short and long-term. Several departments within the Ministry of Finance (MoF), India- the epicenter of the Indian Economy financial decision making- has been shut down. This impacts policy planning. There have been a deluge of reports, which say that we have entered/will enter recession soon.
If India too witnesses several cases of community transmission of Coronavirus, our Economy would have severe repercussions. In the short-term, there will be extensive lockdown periods and a significant loss of life. In a country like India, where the population density is extremely high, the virus is likely to grow exponentially, if not controlled in the initial stages. One must understand that in India a large part of our Corporate Sector has extensive debts and Banks have NPAs. Short-term economic damage can result in debt crisis, which can have far reaching long-term implications for our economy. Thereafter, a general sense of instability would persist for several years to come. Unlike the 2008 financial crisis, this is not a systemic failure of Governance/Financial Institutes. In short: The picture is not rosy, but at the same time, unnecessary fear mongering is not helpful. The problem is grave only if the situation escalates. Nations are built by the collective conscience of people. Now is the time to stand up and do your part.
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