Lockdown Imperative For Public Health But Likely To Send Economy Hurtling Downhill
With the economy receiving almost a death blow, it could take months or perhaps even a few years before we are back on the tracks of progress.
Photo Credit :
To say that Covid-19 has battered the economy is an understatement. Our economy was already stressed owing to a number of factors and the onslaught of coronavirus has effectively sent it to the ICU. People on both ends of the spectrum - businessmen and employees alike are struggling to cope with reality. The virus that has ensured complete lockdown of human activity has crippled every sector and every strata of society. The travel and tourism industry was the first to be hit, next came the industries that counted on China for the supply of components and raw materials followed by the hotel industry. To allay the initial spread of the virus, shopping malls, eateries, retailers, and multiplexes were shut down next with the intent of achieving social distancing. However, by now every industry is reeling from the disruption caused by Covid-19 and we are just entering Stage 3 of its spread. We just witnessed the biggest market crash as the Sensex collapsed by about 4,00 points in a single day and markets have remained volatile.
India is nowhere even close to ready to absorb such a huge shock. Demand has tanked and supply chains are paralyzed due to a nationwide clampdown. SME owners are perplexed about how they are going to pay employees and employees are worried about how they are to meet household expenses. With no certainty regarding when the crisis will end, businessmen are likely to go bankrupt. Experts have forecasted that this economic slump and its repercussions will be worse than the economic downturn of 2009. Due to the imposed 21 day lockdown beginning 25th March, experts say India could expect to witness a loss of 5 to 9 lakh crore. With the lockdown in place, the output would definitely limit growth in an economy that urgently needs to pick up the pace of growth.
The global health crisis has halted investments for startups that have hundreds of employees on their payroll coupled with other mounting expenses irrespective of the fact that operations are being handled remotely. With even the bigger business houses feeling the heat, it’s only natural that the money flowing to SMB’s has even dried up. The rapid progress of the business was a bolt from the blue and despite the usual advice for contingency funds, few business owners actually have such funds to fall back on in these times of economic crisis.
What the virus has effectively done is derailed any efforts for our already faltering economy to get back on track. Growth in the third quarter (October - December ‘19) had already slipped down to a seven-year low of 4.7 % and our GDP could be stuck at below just 5% in fiscal year ‘21 India was already witnessing a recession of sorts and now that can be multiplied many times over.
With the economy receiving almost a death blow, it could take months or perhaps even a few years before we are back on the tracks of progress. The lockdown has been imposed at the right time to stop the community spread of the deadly virus with the intent on preventing long-term harm to businesses, but once this passes, businesses - both small, medium and large in scale will have to pick up the pieces and rebuild painstakingly amidst an unfavourable economical environment. We are hopeful that an economic relief package if offered sometime soon,will somehow save our sinking economy.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.