Economic Slowdown in India as a result of the Coronavirus Lockdown
On March 24th, the Government of India under Prime Minister Narendra Modi ordered a complete lockdown of the country and its borders for a period of 21 days. This was a direct result of the rise in the number of Coronavirus cases in the country. This was a preventive measure taken by the Government against the pandemic. It was ordered after a 14-hour voluntary public curfew on 22nd March after which there were a number of regulations in the country’s Coronavirus affected regions. The lockdown was enforced after the number of cases in the country was approximately 500. The lockdown enforces a number of restrictions on the people of the country. It prevents citizens from stepping out of their homes, all forms of transport, especially public transport services are suspended with exceptions being made for goods, fire, police and emergency services. All Educational Institutes, industrial establishments and hospitality services have also been suspended. Services like grocery and vegetable shops, banks, ATM counters, petrol pumps and other essential services have been exempted from the lockdown. With such a strict restriction in place, necessary as it, the lockdown has resulted in an unprecedented economic slowdown in the country
Drastic Economic Slowdown expected
One of the major sectors which have been hit by the coronavirus pandemic and the resultant economic slowdown is the IT sector which has seen a significant drop in growth this financial year. All major IT companies in the country are now struggling to come to terms with the upheaval that has taken place as a result of the pandemic. The major software exporters like Tata Consultancy, Infosys and HCL Technologies are sure to be impacted by reduction in technology spending by clients in USA and Europe as a result of lockdowns across the world according to experts. Software service and exports in the country grew significantly in the fiscal year 2020 and the current global crisis is sure to have an unprecedented impact on the IT sector which has seen a growth over the years. Experts are of the opinion that IT companies could feel the pressure due to pricing, revenue loss owing to the lockdown across the globe, client bankruptcy along with a slower decision making by clients due to significant economic crisis. Such a situation is unfortunately unavoidable as several events have set the situation into motion and no amount of damage control can make changes.
The country has already been witnessing an economic slowdown despite the fiscal growth in the IT sector, but with the Government’s call to ask its citizens to stay and work from home in a desperate bid to curb the coronavirus outbreak, the slump is sure to be quite drastic once the crisis is over. The service sector accounts for more than 50% of the country’s Gross Domestic Product (GDP) and economic analysts believe that it will be the worst hit after the coronavirus crisis is done. As far as the country’s vast informal sector is concerned, the current call by the Government to practice social distancing is a huge dent to productivity and consumption owing to job and pay losses. A widespread community outbreak and an extension of the current restrictions could mean that the GDP could fall significantly lower and send the economy to an all-time low since the 2009 global recession.
While a number of companies especially those in the IT and communications sector have requested their employees to work from home, this is unfortunately not an option for the country’s large informal sector. The option of working from home is not an option for several sectors like service, manufacturing and transport which is probably one of the worst hit after daily wage workers. The transport sector in the country depends largely on its office commuters and with the lockdown restricting people indoors and the order to stop services for 21 days, the public transport sector needs a miracle to revive itself. The same can be said for the food and manufacturing sector which is time bound and a 21-day lockdown is bound to adversely affect the sector resulting in a significant economic slowdown.
Revival after the lockdown a priority
Most experts are of the opinion that while preventive measures cannot be taken at this juncture, steps can be taken after the crisis passes to ensure that the GDP is brought up and the economy can be healed. While the current crisis does seem to be worrisome, experts believe that though it will take time, perhaps more than two or three years to revive the global economy after this crisis.
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