In the face of an unprecedented financial crisis brought on by the second wave of COVID-19, the Centre must support the retail sector to generate more opportunities for young, according to Hanumanthu Lajipathirai, former Vice-Chancellor of Dr. B.R. Ambedkar University and economist.
“Banks can assist such businesses in meeting their operational and working capital requirements. The banks may also rest certain that their loans would be repaid because the retail retail sector will continue to do well despite the current grim situation,” Mr. Lajipathirai stated.
According to him, the retail industry contributes 22% of the country’s GDP, which is expected to expand by 5.5 percent in the fiscal year 2021-22.
“With the impact of the second wave, the Indian economy has been in a state of historic recession. In the last 70 years, there has never been a situation like this. The Union government can instruct the Reserve Bank of India to adopt a more liberal loan policy in order to boost confidence in medium and small-scale enterprises, which are responsible for more jobs in rural and semi-urban areas.
The Union government’s announced packages should be implemented with zeal on the ground. Mr. Lajipathirai, who previously worked at the Indian Institute of Foreign Trade in New Delhi, believes that state governments should be trusted to help the central government achieve its aims. He also urged assistance for the agriculture, horticulture, and food processing businesses in order to jumpstart the rural economy.
Will India have a recession?
India, which experienced a “very deep” recession last year, is expected to grow at 9.5 percent this year, making it the world’s fastest-growing economy in FY22, according to IMF Chief Economist Gita Gopinath.
Is a recession expected in 2021?
Unfortunately, a worldwide economic recession in 2021 appears to be a foregone conclusion. The coronavirus has already wreaked havoc on businesses and economies around the world, and experts predict that the devastation will only get worse. Fortunately, there are methods to prepare for a downturn in the economy: live within your means.
Is India experiencing a financial crisis?
MUMBAI: India’s economy shrank by 7.3 percent in 2020-21, according to official figures released on Monday, the country’s worst recession since independence, as coronavirus lockdowns displaced millions.
After two consecutive quarters of decline, Asia’s third-largest economy increased by 1.6 percent between January and March, the fourth fiscal quarter, after leaving its first”technical recession” since 1947.
According to a study by Bangalore’s Azim Premji University, almost 230 million Indians plunged into poverty as a result of the pandemic last year, with the poor defined as those living on less than 375 Indian rupees ($5) per day.
An loosening of limitations near the end of 2020 aided a tentative resurgence in activity, although this could be short-lived with an increase in Covid-19 instances in April and May.
According to the Centre for Monitoring the Indian Economy, India’s devastating second wave, which has killed 160,000 people in eight weeks, triggered further lockdowns and resulted in 7.3 million people losing their jobs in April alone.
In a country where 90 percent of the workforce is employed in the informal sector, with no social safety net, and millions of people do not qualify for emergency government supplies, this means further suffering.
In response, Prime Minister Narendra Modi’s government has resisted introducing any new substantial stimulus initiatives.
The administration has come under fire for focusing on loans to hard-hit firms rather than direct cash transfers to disadvantaged households, including from Nobel Laureates Esther Duflo and Abhijit Banerjee.
According to a recent report by Barclays, the economic cost of India’s second wave is $74 billion, or 2.4 percent of GDP.
However, because output fell so dramatically last year, the headline figures for the current fiscal year will appear robust.
India’s central bank forecasts 10.5 percent annual growth, but the International Monetary Fund predicts 12.5 percent growth, the fastest among major nations.
Analysts will “have to reassess this forecast much more frequently, given that it depends on the rate of vaccines and the pace of limitations,” she said.
“While this year’s scenario is not as bad as last year’s nationwide lockdown, the economy is under a lot of stress as a result of localized restrictions, which we expect to extend into the remainder of the year.”
Even though India’s economy had been slowing for some time before Covid-19 struck, the epidemic wiped out years of progress.
Last year, an estimated 50 million Indians were anticipated to rise out of poverty. Instead, as business came to a halt in April and May, the poorest 20% of households lost their entire income.
According to a survey by Azim Premji University, the statewide lockdown put about 100 million people out of work, with around 15% unable to find work even by the end of the year.
Namdev Sakpal, 43, was laid off from travel operator Thomas Cook last year and has been looking for work for months.
Last June, a former sous-chef at a top Mumbai hotel was placed on unpaid leave and has yet to return to work.
“The lockdowns are producing constant worry for all of our employment,” Prateek, who did not want to be identified, added.
“We were told we’d be called back to work shortly,” says one employee, “but the lockdowns keep growing longer.”
Experts fear that the second wave, which has waded into India’s poorly equipped villages, will exacerbate an impoverished population already struggling from the shutdown last year.
“Unlike the past time, income destruction has been universal this time, affecting both rural and urban India,” said Arvind Singhal, head of Technopak Advisors.
“Cash should be delivered directly to the 200 million poorest families.” And it must be supplied immediately, not later.”
India has so far reported 28 million coronavirus infections and administered 213 million doses of the Covid-19 vaccine, despite delays and shortages in its enormous vaccination effort.
Is India on the verge of collapse?
According to the estimate, India’s absolute GDP will struggle to return to the 2019-20 level by 2023-24, the last year of this government’s current term. This is exactly what Kumar has said.
“As things stand, and assuming the government maintains the 2020-21 expenditure budget for 2021-22 as well, 2021-22 is projected to see a GDP growth rate of -8.8%.” This is a scary concept because it means the country could enter a full-fledged depression the first in our country’s history as an independent nation,” Sen.
The Indian economy was already in horrible shape, suffering from the long-term consequences of Demonetisation and the hurried adoption of an ill-advised GST scheme. COVID-19 arrived like a Black Swan, hammering nails into India’s economic engine.
India has experienced how many recessions?
According to the RBI’s economic data, the country has experienced four recessions, beginning in FY 1957-58 (when GDP contracted 1.2%), followed by 3.7 percent contraction in 1965-66, 0.3% decline in 1972-73, and 5.2 percent contraction in 1979-80.
Unlike the current fiscal year, when the main cause of recession is a global pandemic, prior recessions in India’s GDP were caused by two factors: a weak monsoon and an energy crisis. However, if India’s FY21 GDP drops in the September quarter, as economists predict, the contraction will be substantially larger.
In 1957-58, India experienced its first economic slowdown, with a negative GDP growth rate of 1.2 percent. The reason for this was a soaring import bill that increased by more than 50% between 1955 and 1957. Drought and hostilities with China and Pakistan triggered the recession in 1966.
Drought caused a 20% drop in food grain production in 1965-66. Foreign food help came to the rescue of India’s famished populace, with 70 lakh tonnes of food aid received in fiscal 1965, equal to 10% of local production.
Why was India untouched by the economic downturn?
India’s economy has profited from recent rapid economic growth, which has since slowed significantly as a result of the global economic crisis. India’s economy grew by 6.7 percent in the fiscal year 2008-09. India was less affected by the global crisis because exports account for only 15% of its GDP, less than half that of big Asian economic powers such as China and Japan. However, unlike other major Asian economies, India’s government finances were in bad health, and it was unable to implement large-scale economic stimulus measures as a result. Despite this, India’s industrial production increased by 7.1 percent from June 2008 to June 2009.
Former Indian Finance Minister P. Chidambaram once claimed that he expected India’s GDP to “bounce back” to 9% in FY2009, despite the fact that he was wrong. Manmohan Singh, India’s Prime Minister, stated that the government will take steps to ensure that the country’s economic growth returns to 9%. India’s economy is expected to recover in 4-6 quarters, according to the Asian Development Bank. India asked for a coordinated global fiscal stimulus at the G20 Summit to help alleviate the severity of the global credit crisis. India announced a US$4.5 billion injection into the financial system to assist exporters.
According to some commentators, India’s rising commerce with other Asian countries, particularly China, will assist to mitigate the crisis’ harmful effects. India’s high domestic demand and huge infrastructure projects, according to analysts, will function as a buffer, minimizing the impact of the global slump on the country’s economy. According to economists, India’s financial system remains comparatively unscathed, and its banks have little exposure to subprime mortgages. The New York Times lauded the Reserve Bank of India’s strict rules on the Indian banking system in an editorial.
India’s economy grew at a 5.8% annual rate in May 2009, above most estimates. The Indian economy increased by 7.9% in the second quarter of 2009, indicating that the Indian economy will grow at a rate of 7% or higher in 2009 and 8-9 percent in 2010. The economy recovered in the third quarter of 2010, growing at an annual pace of 8.8%.
How long do economic downturns last?
A recession is a long-term economic downturn that affects a large number of people. A depression is a longer-term, more severe slump. Since 1854, there have been 33 recessions. 1 Recessions have lasted an average of 11 months since 1945.
Is a recession expected in 2023?
Rising oil prices and other consequences of Russia’s invasion of Ukraine, according to Goldman Sachs, will cut US GDP this year, and the probability of a recession in 2023 has increased to 20% to 30%.
Is India’s economy performing well?
With its robust democracy and strong relationships, India has emerged as the world’s fastest-growing major economy and is anticipated to be one of the top three economic powers in the next 10-15 years.