Indian economy is distinguished as a middle income developing market economy where demand and supply play a major role for investment, production and distribution. It is the world’s 6th largest economy by nominal GDP and 3rd largest by Purchasing Power Parity (PPP). After 72 years of Independence there is a tremendous change in the thinking process towards the economy. India dreams to join the $5 trillion club and all measures are taken from time to time so that it will be converted into reality.
Till the year 2012 the Indian economy has seen a drastic change and an increase in the economic growth of the country. Even after 2012 till 2016 there has been an increase in GDP rate. The economy has seen ups and downs over the years but in the year 2019 there was a pandemic eruption due to which there was nationwide lockdown, specific zone lockdowns, restrictions on movement and many such hindrances that hit the economy in the worst manner.
Indian Economy in the first quarter of the calendar year 2021 plummeted to -24.4% and in the second quarter to -7.3% and has been linked to Covid. The third quarter is estimated to be 0.5% and the fourth quarter to be 1.6% of GDP growth rate.
The agricultural sector has shown some positive results in its growth rate. It has grown from 3.1% to 4.5% which is commendable amidst the pandemic situation.
Federation of Indian Chambers of Commerce and Industry, an association of Indian business organisations dedicated to promoting the growth and global competitiveness of Indian business, gives a blunt warning to the Government that the overall business confidence will nosedive if this situation continues to the third quarter of the year 2021. The general pessimism about Economic prospects is given in the following manner. Business confidence index has fallen to 51.5 from 74.2. Outlook on profits are estimated as that in the next 6 months it will deteriorate. The advisors are also fearing about the man-power shortage in the industries due to the fear of the spread of infection. About 80% people are facing various issues amidst localised lockdowns and the most important concern is that the demand has decreased and the consumer sentiments have to be taken into account where the savings is becoming more fearsome to future occurrences. The consumption needs to be boosted through various ways so that people feel free to spend money.
In the second wave there was no Nationwide Lockdown but the key areas in the country were locked in purview of the pandemic. This is also one of the major causes for the business sentiments to nosedive.
The advisors from the bank sectors say that if the third wave is as moderate as the first wave the economy can bounce back to positive numbers but there are some key areas where focus needs to be, that is consumer demands.
The MSE’s were hit hard after the first wave and after the second wave they are in a better position. The rural areas which were unaffected in the first wave where the proportion was 70:30 in the covid cases was largely affected in the second wave due to large spread of the disease and the proportion is 40:60
The economists advise that by the end of the second wave there are few things that must be taken care of – MSME sectors, Rural economy and consumer sentiments which will be hit hard in the third wave if not taken care of now.
Chief economic advisor has given a clear suggestion that the pace of vaccinations must increase in order for the economy to recover. The chairperson of FICCI has advised the Government to print money and to increase demands. They must also remove the fear in the people’s minds which will restore business confidence. Many states are normalising the situations which are signs that the economy may plunge back and increase above 51.5%
The economic advisors are worried about the resilience of the Indian economy to handle the third wave and to bounce back to the positive GDP rate which has shrunk to the negative numbers due to the second wave. Government intervention is very important for the demand of consumers and also for business confidence.
Though the GDP numbers have gone down to negative numbers, there are hopes that by proper implementation of tech tools the Indian economy can boost back to positivity.
Jay Kumar Menon, a human rights lawyer is presently working on a vaccination for fighting against coronavirus. The main motto of the organisation is health maximisation and not profit maximisation. They are working for the betterment of humanity and have capability to fight against 4 diseases at one time and not specifically for Coronavirus and in the process will fight against this Coronavirus too. The Phase III of testing of the vaccination will be conducted in Brazil and India very soon which will give confidence in scientists and people to utilize the vaccination.
Since they are using many already existing vaccines as a combination, the World Health Organisation is quite confident about the vaccination. The trial rounds are being conducted only to prove the fact how effective the vaccine is against Covid. Since it is a combination of other vaccines the percentage of people suffering after effects of vaccines is comparatively less.
The business confidence needs to be boosted very soon and citizens have to be vaccinated too which will normalise the things quickly. Government intervention is very important as it acts as the pillar of support to people who will build confidence and become the main purpose for the economic development.