The overall situation of Indian economy during the period of pandemic presented a gloomy picture of our finance
India is a land of mixed economy which means that it does not depend on any particular sector but on all who contribute more or less to the developmental index of Gross National Product (GDP). Even in pre- pandemic decades, the economic condition of the country was far from satisfactory as indicated by the World Bank and several rating agencies. Soon after the eruption of Covid-19 in China and its wide spread in almost 200 hundred nations across the globe, it began to affect Indian economy negatively since February-March 2020 and the first phase of 21 days lockdown was announced on 24 March. Although in all the phases of lockdown, Indian people in general remained sincere and followed the instructions given by the Health Ministry / other competent authorities during the entire period. It gave the country a thin hope as its progress in first two months was very slow. Later two important developments- a religious gathering in New Delhi which was attended by hundreds of foreign nationals coming from Covid-19 infected countries and back- home campaign of migrant workers from agriculture-rich states backed by industrial shutdown in various metro cities added fuel to the fire.
In the context, the worst affected period remained during 4th quarter of the fiscal year 2019-2020 and 1st quarter of 2021. While India's growth went down to 3.1 % in 4th quarter, in mid-May 2020 the GDP witnessed more negative features and deep recession since Independence. The continuous slowing down of economic activities pushed the rate of unemployment within a month from 6.7% to 26% in the third week of April 2020. According to an estimate during the lockdown about 14 crore people have lost their job while many others faced a salary cut due to the financial emergency. As a result, the household sector reported an income drop of 45% across the country as compared to last year. It was expected that India lost over Rs.32,000 crore every day in the first 21- days phase of complete lockdown. Following the coronavirus outbreak and shutdown of economic activities 53% businesses of the nation was significantly affected. All major companies of the country halted their production temporarily and reduced operations significantly. Other sectors such as young startups, consumer goods companies, stock market witnessed heavy losses on account of the continuing pandemic. Thus, in the four phases of lockdown (25 March-31 May 2020) the nation's economy faced many- fold downward trend perhaps, for the first time in Independent India, following the philosophy that life should come first while choosing between life and livelihood. Ultimately, the unlock
Status of various economic sectors
The overall situation of Indian economy during the period of pandemic presented a gloomy picture of our finance. In every sector of economy there was a significant decline with a steep slowing down trend. The first jerk of our position came in the form of GDP which came down as per Moody's estimation, a globally known rating agency, from 5.3% to 2.5 % for the financial year 2019-2020. Likewise, other rating agencies such as Fitch Rating estimated the GDP growth near 3.5% while the World Bank, focusing the growth in South Asia, said Indian GDP to be remaining about 1.5 % to 2.8% in the financial year 2020-2021.
The waves of pandemic brought a lot of problems for medium and small farmers who could not harvest their crop and reported a major loss for the coming season. Due to continued lockdown in the country food wastage also increased because supply chain of grains was badly affected. Although most of the activities related to economy began to open from 01 June 2020, it will take time to be normal as workers engaged in these industries had left the places. Complete lockdown period cast a deep and far -reaching dark shadow on major industries of automobile, electronic, garments, leather, Grasim and a host of other manufacturing industries. Particularly stock market- Sensex and nifty registered a significant fall of 4000 and 1150 points respectively. As we are aware, e-commerce is an important ingredient of Indian economy and the Covid-19 compelled Amazon, Flipkart, Walmart and others to suspend their services in a big way. Although, they continued the supply of essential services in health sector, but stopped the supply of all non -essential commodities. In the meantime, the Central and State governments incurred huge losses and they both find it very difficult to acquire funds to fight coronavirus and keep the country's economy on the track. At the juncture, economic experts suggested several measures to be adopted by the competent authority to come out from this grim economic situation.
Government policies and packages
From the day first of the eruption of Covid-19, the Government of India is thinking and following up all possible measures to overcome the new situation. Pursuing the dictum that life should be preceded by livelihood it implemented the first to four phases of lockdown with reasonable ease in economic affairs from time to time. Government's pandemic scheme ranges from food security, making available funds for healthcare and release of funds for needy States. Initially, on 26 March total of Rs. 170 crore funds were announced which followed a bunch of measures by the Reserve Bank of India, the next day. The RBI scheme would make available Rs. 374 crores to country's financial system. In addition, the World Bank and Asian Development Bank also approved support to tackle the Covid-19 in a better way. This apart, RBI's steps taken simultaneously help minimise the effects of coronavirus to NABARD, SIDBI, and NHB.
However, on 20 May 2020, the major economic relief package of Rs. 20 lakh crores, equal to the 10% of nation's GDP, was announced by the Prime Minister Narendra Modi, who also gave the mantra of "Self- reliant India “or "Atmanirbhar Bharat" and extended several reliefs to small and medium industries/enterprises. All the details of this mega package were made public in the next five days by the Finance Minister and State Minister of Finance, which include several economic packages and free food grain scheme. In line with a view to expand after four innings of lockdown, from 01 June 2020, the first phase of unlock-01started which opened more than 90% enterprises, all type of shops, except educational institutions all over the country. It all paved the way for the normal economic activities and soon, in next two-three months, it may prove more easy and recovering.
(Author is Professor and Head, University Department of Political Science, B.N. Mandal University, Madhepura)