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Overview of Indian Economy right now
Corona Virus is a respiratory disease which is technically called SARS Virus and the disease it causing is called Covid19. It has come as a ghost to haunt 2020. We do accept it has a health scare, But we cannot deny the financial impacts of Covid19 on Indian economy.
In 2020, each and every country is dependent on each other for certain things. That is the main reason each and every country will be impacted by this disease. In this Blog will shall specifically discuss on the impacts of Covid19 on Indian Economy.
Current situation of GDP and Ratings of India
21 days lockdown is definitely going to impact India’s financial year 2021, which will begin on 24th of March 2020 till 14th of February. On 26th of March, finance Ministry announced Rs.1.7 lakh crore relief package. Moreover, RBI joined the bandwagon by announcing a sharp rate cut in Repo Rates. This was to make the credit available at very affordable rates for the Failing businesses and boost India GDP growth rate
GDP of India was already in ICU with a lackluster performance in last 40 years and it will bring more pain to the daily wage earners of the country.
Below is the forecast of different agencies for Indian GDP growth:
On March 27, Moody’s slashed India’s GDP growth from 5.3% to 2.5%. This announcement came out after Prime Minister’s announcement of 21 days lockdown.
CRISIL is an Indian Rating Agency and it slashed the GDP growth rate of India for financial year 2021 from 5.7% to 5.2% on March 26, 2020. CRISIL has further warned regarding the negative impacts if the pandemic is not contained by June 2020.
Standard & Poor’s
Earlier S&P had estimated 6.5% for India, but recently it reduced it to 5.2%. Even for 2022 S&P reduced the GDP growth rate from 7% to 6.9%.On the top of that it has said Asia-Pacific is guaranteed on the verge of a recession due to disruptions in China.
Earlier this year Fitch estimated 5.6% the GDP growth, but it has now reduced it to 5.1%.
CARE, a Mumbai based rating agency, estimated that in January-March quarter growth rate is going to be 2.5%. It earlier forecasted a 4.7% growth rate for India before the 21 days lockdown.
Real impact of this shutdown will be seen in the first quarter of 2021. This can potentially lead to a de-growth in GDP. If lockdown ends exactly on 14th April, 2020 then the GDP is estimated to grow at 3%.
What India can do from here to boost GDP of India?
There are certain definite steps that Indian Government can take to neutralize the current situation. Along with working on the war level against Covid19, India has to heed upon its financial situations as well.
As India GDP Growth was already in its worst shape ever, a downturn can feed itself from there on. More layoffs will happen, demand will be lower which will lead more companies to shut down their businesses. Ultimately it will hamper the India GDP growth rate.
Here the Government of India has to intervene and help the current GDP of India to grow. Certainly government has taken certain steps in that direction. Government has taken the following steps:
- Government has moved the deadline for Tax filling.
- Insolvency proceedings are now starting from 1 cr.
- Bank charges has been removed from online transactions.
- Relief package of 1.7 lakh crore has been declared for COVID19 emergency.
What more Indian government can do to help Indian Economy?
There are certain other steps that Indian Government can do, which are as follows:
- More Tax breaks and softer loan terms for SMEs.
- Easy line of credit must be provided for MSMEs to increase the employment rate and thereby increasing the India per capita income. This will surely help GDP of India.
- Indian Government should work on controlling the inflation and increasing the demand.
We do believe that Indian economy is going through a gloomy phase, but we are pretty much sure as well that under the guidance of our Prime Minister we will be able to jump back to where we were before. Loans will be cheaper and that will be a golden opportunity for new investors to jump in. That will be a golden opportunity for Women entrepreneurs to capitalize on Why a women entrepreneurs should start a business is already been mentioned in our last article. Thus, all the entrepreneurs, who have a dream of starting something of their own, should start once this urgency is over.