Indian Economy amidst COVID-19

The world may face the danger of recession, June 2020 quarter may witness a big shrink in the economic output, and a tremendous lowering in growth for FY21, these will take a toll on corporate earnings as well as stock prices. The impact on Indian Economy shall also not remain untouched with the global recession. With the number of COVID-19 cases leaning dangerously more than 1.2 million approximately and the worldwide death toll crossing more than 70,000 in number approximatley, by the end of first week of April 2020, the World Health Organization (WHO) declared the COVID19 outbreak as a pandemic in second week of March 2020, exactly four months after the novel virus was heard in headlines. Nearly all the countries are steadily going into lockdown, and global businesses are operating in fear of a prabable collapse of big global financial markets. This situation, in India would worsen as result of cumulative effect of already lowered GDP in the previous year, leading to extremely volatile market conditions. With enhanced unemployment, interest rates, and fiscal deficit, the economy in India has seen better days. The novel Coronavirus added fuel to this and sending tremors down Indian trade markets dependent on China for imports.

India’s financial instability has been further exaggerated by this pandemic. The rapidly spreading Covid-19 pandemic has put the global economy in dark, which was already a victim of the US-China trade war . Under the massive threat of global recession, Covid-19 led the global economy massive supply-chain imbalances in a wide range of industriesin almost all developed economies. The lockdowns created magnification in the impairments caused due to uncertainties and propagation of financial disturbances and the US dollar credit crunch.This global shock arrived India at a particularly misfortunate time, when the country has already been on a downward trajectory since the last Financial Year. On a quarterly basis, India’s growth rate in Q4 FY18 was 8% which decreased to 4.5 % in Q2 FY20.

Like India, several economies throughout the world have become cognizant as a result of over dependency on China. Making the current situation a learning opportunity, CEOs of Indian multinationals, who recently attended the annual meeting of the Confederation of Indian Industry (CII), believe that this is the time when Indian manufacturers can work on acquiring potential share of chinese market in India, by enhancing the indigenous production of goods, thus promoting the country’s ‘Make in India’ campaign launched by honorable Prime Minister of India.