Varun Saxena Young Leader - IndiaGlocal
Varun Saxena is a full time undergraduate petroleum engineering candidate at Rajiv Gandhi Institute of Petroleum Technology, Jais. This article was submitted as part of his selection process as an IndiaGlocal - Young Leader. The views and opinion in the article are solely of the author.
The COVID-19 outbreak has led to the biggest global recession ever since the end of World War II. The pandemic, and the associated restrictions on human interaction adopted to stop its spread, have definitely led to disastrous, massive downturns in advanced economies all over the world. The Indian economy before COVID-19 was soaring in the high sky but eventually, the current situation is totally opposite as the Indian Economy is confronted with the fourth recession since its independence. One could not have even thought of such a scenario as the reason this time is completely different from the earlier ones. Still, the question arises for our policy-makers and industry leaders are: how to replenish and revive the economy back on track?
By now, it is clearly visible that a complete lockdown disrupting economic activities cannot be sustained over long periods of time. The decision of nation-wide lockdown with the shutdown for most production activities was taken up by the government as a conscious and precautionary move to slow down the spread of the covid virus. There is no doubt that the lockdown is the root cause of the economic instability currently being faced in the nation but this was a necessary step taken by the government to ensure the safety of the citizens.
The point now is what comes post this lockdown? Will the unemployment still be surging to high levels or a bear market continue falling or the relief finally been laid down by the government will show some results? We are hopeful that loosening of financing conditions by the RBI, amendments made in government spending, and proper coordination with different states can spur the cycle back on the track.
A phased allowance on supply to recover, while keeping the virus in check is the need of the hour. The prime consideration is at helping daily wage workers and small firms to help them survive the recent negative demands of commodities. The best help that the lower (and middle class) can get is direct money transfers by the state government, interest rate alterations, liquidity and refinance facilities with extension, relaxations on loan, the introduction of tax relief methods, and others. Daily Wage and Provident Fund subsidies should be definitely targeted to MSMEs along with the most affected sectors of the economy and preserve employment at least for the short-run with upskilling and re-structuring with the passing of time.
The automobile sector reported absolutely no sales during the past few months. While the biggest contributors in the economic growth such as real estate, construction, travel & tourism, all reported negligible and even negative generation of revenue. Except for the healthcare sector and essential services, the agriculture sector was the only part of the industry that kept working too as the demands glided quite high. Since a large part of India’s manpower is involved in agriculture, this was the saving line for many.
It is an utmost priority of any business to ensure continuity and look at the long term rather than just taking into account a narrow picture and quitting off. But still, the question arises how will the economy gain a bull rise once again during this economic crisis that is deeper than the 2008 blowout?
The economy of any country is directly based on demand from the customers, the necessities, perception of investors to start their business again. Reforms must be framed in a manner that the worst-hit industries, start-ups, MSMEs are supported so that they don’t run out of the race and hence employment continues. If employment continues, the give & take would again establish within the market and help the government generate revenue. Labour laws must be reformed and further provided with a new pay package as a revival of this sector ensures a huge opportunity of benefits in other interlinked sectors like real estate, manufacturing, etc.
The government definitely needs to act the savior in this hour of crisis, but it cannot alone rectify all the problems. All of us need to contribute towards an “Atmanirbhar Bharat” and as a result, employment and entrepreneurial opportunities will surely be generated and that is the key to drive the Indian economy at a faster pace.