Covid-19 and the Indian Economy
Updated: Mar 1, 2021
Pic Credits: The Economic Times
Collapsed healthcare services, negative growth rate, lockdown, the migrant crisis, farm bill protests, tension at the border and many such things became common during the time of Covid-19. Covid-19 was a shock to several already deteriorating systems. It removed the invisible cloak and made the picture clearer; it has forced us to think and debate about topics like healthcare and education which earlier seemed to be so common and abstract. Human resource development is much more important and necessary as compared to physical or materialistic development.
India’s first-quarter contraction in GDP in 2020 was reported by nearly -24%. Economists suggest that it may be more negative. Complete Lockdown imposed is one of its causes. But the lockdown was mostly in vain. Covid cases have been rising exponentially showing the inefficiency of the decision.
When the lockdown was imposed, we faced the problem of labour migration on a very large scale. This is shameful for any country that labourers were so in unrest that they travelled thousands of kilometres on foot. This in turn forces us to think more deeply about the problems related to labourers in the form of housing, savings, sense of security, labour laws, etc. This highlights how neglected and unsafe they must have felt while being forced to move towards their hometown.
The healthcare and education sector has always faced challenges that were increased during the lockdown. There is a lack of hospitals, beds, staff, and machines. Government hospitals have been in the news for all their shortcomings in terms of treatment and infrastructure. The education sector is severely hit with students and teachers facing several psychological, economical, and developmental problems. Online education is not accessible to the majority of the students especially in villages and underdeveloped areas. Government schools have not made the required efforts and children also face challenges in terms of holistic development. An increase in the dropout rate will be a major issue for a young nation like India.
India’s financial sector has been in a mess, with a huge pile of bad loans and NPAs. Lowering interest rates is not driving loans and investments. The Modi government needs to take serious and bold steps to control this situation. Also, due to Covid, there is low demand and overproduction. This problem alone can initiate a chain reaction of low investment and high unemployment, making post-covid recovery very difficult. The real estate and manufacturing sector is in huge problem. There is a serious need for demand injection by the government by both direct and indirect means. The government should increase its expenditure and improve the purchasing power of people by providing them with cash and incentives.
There have been social and political problems that could have been dealt with more efficiently by the government. India faced military problems with China. It was a hotly debated topic during the covid time that India should become more self-reliant or Atmanirbhar, as announced by PM Narendra Modi. India aims to grab the opportunity of attracting foreign investors that are moving out of China, but other countries like Vietnam are being favoured more by international companies. There are multiple reasons behind it.
Red Tapism and uncertainty are one of the biggest hindrances. Companies favour places that have more stability in political, economical, and legislative terms. In India, corporate laws and even governments change frequently. The greater problem is unskilled labour and low investment in healthcare, education and research by the country. South India has a higher literacy rate, hence it attracts more investment as compared to the northern heartland like UP or Bihar.
It is a fact that China enjoys a trade surplus of billions with India. China is also a source of demand and its demand can be fulfilled by India if we see trade as a win-win situation for all instead of debating that one’s loss will be the only chance of gain for us.
The government is struggling with protests on several matters like CAA, NPR, Farm Bills, etc. More transparency and democratic procedure are expected from the largest democracy in the world. The Prime Minister is an amazing orator with a charismatic personality, but it’s an unbelievable fact that he has not held any press conference as PM. It looks as if there is a communication gap. The government needs to be more clear about its policies and present them to the public with more clarity. This is a serious need of the hour that the PM must leave his Public Relations aside and focus more on development, which may require certain bold and painful steps, which may even cause his rankings to go down. The opposition must also understand its responsibility and provide constructive criticism, keeping aside its main propaganda in such uncertain times. Moreover, there is a need for better economists, policymakers, and advisors at the apex level.
Udit Joshi (Guest Writer)
Satyavati College DU (B.A. Economics Honours)
Udit is a nature lover. He comes from the beautiful state of Uttarakhand. He is a curious being. Some of his interests include - Acting, Sports, Economics, Data science, etc. He also writes sometimes and likes to explore things.