Global Recession │COVID-19 Impact: Where is India's Economy Headed? - Techzfacty

The world economy is struggling with another recession as the COVID-19 pandemic has forced businesses across the world to suspend their operations sectors such as Automobiles, real estates & banking have a difficult time ahead. Money control breaks down the impact of coronavirus induced global slowdown on India. Most Indians Companies will see their revenue & profits getting impacted amid COVID-19 pandemic. There is a direct impact on demand & supply of goods & services.

According to (International Monetary Fund) IMF, has mentioned that due to lockdown because of the Coronavirus the economy worldwide has already been hit by the recession. In fact, According to them, not only will this recession be worse than the 2008 Global Financial Crisis but if will be the worst economic recession in the past 100 years after the Great Depression of the 1930s.

        But most of the economist is of the opinion that the conditions of today is going to be worse than the recession of 2008. E.g. of France: The quarterly GDP growth rate of the first 3 months in France has been calculated to be, -6 %. This is the worst performance in the history of France ever since World War II.

        Q. Will India be able to overcome the current crisis the way it did back in 2008?  

So According to former RBI governor Raghuram Rajan "Economically speaking India is faced today with perhaps its greatest emergency since independence." 

The Global financial crisis in 2008 - 09 was a massive demand shock but our worker could still go to work.

Here are few sectors mentioned which are severely impacted.

  *  Agriculture sector contributes nearly $ 265 billion to the agriculture sector employ 60% workforce and hence its GDP is severely impacted. Also, there is an absence of labour force to cut the crops and transportation problems will have serious implications.

  *  Lockdown has worsened the struggle of real estate sector production in the Automobile sector is on hold. It has declined by 15% - 16% in the financial year 2020. India sets to report zero automotive sales in April.

  *  The Banking sector may suffer consequences of the build-up of bad loans.

  *  The unemployment in India has increased. There are 32 million jobs at risk in India. 

  *  Hotel industry revenue is likely to fall by ₹90 thousand crore in 2020.

  *  Luxury housing may see a 20% reduction in prices.

  *  A fall in consumption of around 10% in food and utility sector in the current scenario.

  *  The corporate sector might see a 6% default rate with sectors like aviation, textile, powers, construction showing a higher rate and around 3% default rate in the retail segment.

  *  In Share market, After first two round of Coronavirus outbreak have already wiped off 52 lakh crore worth of equity investors wealth with benchmarks, Sensex & Nifty languishing at multi-year lows after falling 35% from their January peaks.

  *  Sports industry-   All sporting events & matches have either been cancelled or postponed, as there were many jobs depended on it. One who organise such events, the one who works in the stadium have become jobless. Olympics cancelled, IPL postponed.

*  Travel & Aviation industry- It is one of the hardest-hit industry.

E.g.- hotels, airlines, travel agents, tour group organisations, all of these are unable to work & earn salary.

* Film & entertainment industry- Cinema hall have been shut down, screening at the film has been halted the, film production has stalled.

* Concerts, theme parks shut down Artists unemployed.

Compared to 2008, there are some critical differences in today's scenario. Firstly being that the people today are not working due to the lockdowns. When recession has struck in 2008 some banks did collapse & some people did lose their jobs. But on the whole, the economy was still running & people were still working.

Apps like Zoom, Skype has been or tremendous grown as people are communicating through it. Netflix, Amazon prime & Online Gaming are among the few sectors that have profited.

* The International Labour Organisation estimated that COVID-19 will destroy up to 25 million jobs, According there will be inflation & prices could rise when stucks & inventories run low, High prices for essential goods will strike citizens as unfair & unacceptable. If could result in price control & rationing.

      In Future: The third round effect will likely materialize as these shocks transmit to rest of the economy, i.e corporates facing a hit on bottom lines, weaker firms will force cash flow shortage & workers will face pay cuts or retrenchments. This, in turn, can create a vicious cycle of lower corporates Capex & weaker consumer demand. Everyone hoping that situation will improve & containment policies are lifted.