Post Covid-19 Economic Status

 The Impact 

After the dramatic pause due to the impact of the coronavirus, economists have begun to wonder what shape would the recovery take place after the pandemic is over. And when would the rise if any stabilize or be at par with the pre-covid-19 level.  In spite of enthusiasm expressed by some planners, a V-shaped trajectory is nigh impossible taking into account the disruptive nature of the pandemic. 

The state of financial well-being and business stability is always expressed in figures and percentages in graphs and info graphs online. The methodology adopted in order to compute the economic status at any given time is standardized. But there are many if and buts that regulate the outcome.  At the present juncture, all cogs in the wheel have been badly disrupted. There seems to be no recourse to a stable environment that will fetch prosperity back to the people with states being shrouded by the dark clouds of death and destruction.     

The lowest figures stated by the World Bank and rating agencies are suggestive of a deep plunge due to the impact on the growth which was witnessing a downslide for the first time since liberalization in 1990. Growth figures projected for the fiscal year 2021 have come spiraling down indicating a deep recession. The negative growth rate is attributed to the pandemic and not surprisingly calls for economy booster packages.      

After a deep plunge downwards due to intense lockdown globally, there was a brief upward trajectory whence the first wave ended, and it seemed that this was the end of the travails. But this was not to be, for the second wave after a brief lull shook the Nation with complete surprise.  

The contraction of GDP in the year 2021 is as much as 40% which is not at all encouraging. This is a testing time for planners and the dispensation as to how it extracts the country out of the quagmire.  

The coronavirus is attacking humanity in waves, each being as uncertain as the first one. The second wave has struck with complete surprise causing an unimaginable loss in terms of humanity, as well as the economy. Though the period has been relatively short, the economic impact has not been as devastating as the death toll. But the scars are going to take a long to erase, and the uncertainty that prevails will definitely affect the economic recovery if we add the impact of the first wave now already exhausted. 

In order to comprehend the post-pandemic state we will have to consider many factors that currently govern our economy.  

India remains a third World mixed economy, even if we take into consideration a few strides of success we have made here and there. We are certainly yet to reach the top in order to be seen as a developed Nation.  

The first aspect that we are concerned about is the pandemic itself and how it will unfold further. Will it die down after the apocryphal third wave in a short time or will it be a prolonged tragedy pulling the country deeper into to chaos and economic downslide? No wonder the pandemic has been the worst disaster of the century.  

The impact has been cataclysmic, and we are still reeling under the human tragedy that has unfolded. The destruction has not been in material terms like in the World wars. But the deaths have certainly been more than them. Equally, the next worst impact heaped upon us has been the economic downturn which has affected all strata of society, all over the globe. Hardly few sectors have been left unscathed, but they too have suffered indirectly from the abrupt cessation of industrial activities all around. Both the manufacturing and the service sector have been performing badly. The reduction in employment and the salary cuts including that of the daily wage group and the informal sector have directly impacted the spending power of Indians which has reflected upon the manufacturing as well as the service sector.  Knee-jerk solutions have provided no succor in the current state. They have not made any positive impact on the situation albeit substantial relief has been provided to those below the poverty level as far as sustenance is concerned.  

More than forty percent of Indian households have reported an income drop during the ongoing lockdowns. More than fifty percent of businesses have reported a total closure or significant slow down this has impacted the country's 2.8 trillion economies such that only a quarter of it is functional. The supply chains have been put under severe stress with the agriculture sector being the worst sufferer during the lockdown.  

The business resumption index stands at the dismal figure of 44 much less than 89 which was the pre-pandemic figure. There is a lot of hesitancy as regards stability in this period and business operations have been significantly affected by the absence of contingency management within and at the National level since even when the virus struck in Wuhan none assumed that the emerging epidemic would turn into a pandemic. The spread has been universal and the significant slowdown due to frequent lockdowns has increased the suffrage of the people exaggerated by sickness, deaths, and unemployment as a result.   

There would be a significant improvement in the situation if the vaccination is successful or if the pandemic subsides completely on its own. India has the resilience and the necessary wherewithal to bounce back as a Nation and this applies to the economy as well. Will we see the daylight in the year 2022 or 2023 is a matter of conjecture?