Government is bracing for a recession period that might hit the country due to Coronavirus pandemic. According to top global experts, India’s Gross Domestic Product (GDP) might shrink by 45% due to the economic fallout of Coronavirus outbreak. The government has already announced a series of structural reforms to support the economy but experts say they may not be enough in times of crisis. There is a greater chance that India might go into recession in 2020.
Coronavirus outbreak has not only impacted India’s economy but other financial hubs have been affected as well. Foreign investors have pulled $26 billion from Asian economies and $16 billion from India alone. A major part of population in India consists of its youth citizens aged 20-35 who are prone to India recession 2020. They will now play a determining role during the economic crisis. Entrepreneurship and young ventures are the only support pillars of India’s growth after big industries fail.
How can India dodge effect of recession in 2020?
When the 2008-09 financial crisis hit, India was largely unaffected due to its self-dependence on essential product and services and agriculture-based economy. As soon as economists made predictions of a global fallout due to Coronavirus, India’s Prime Minister Narendra Modi initiated a new mission for the country, to make it self-reliant. The ‘Aatma Nirbhar Bharat Abhiyaan’ focuses on providing easy business opportunities in the country. India, that earlier relied on foreign investors is now planning to proceed on a tough path of transformation.
India’s economy has always been agriculture-based. More than 70% of its total population is in some sort linked with agriculture-related activities. Global recession like scenarios tends to hurt service sector and manufacturing sector the most. Agriculture and related elements are mostly unaffected by them due to their essential nature and price component factors.
It may be safe to say that due to its conservative approach and modern techniques combined India may be among the best responders to the global jobless scenario.
Why there is possibility that India might suffer worst recession since 1979
Balancing between health and economy might be the biggest challenge for the government of India. With the World Health Organisation (WHO) saying that Coronavirus pandemic might stay for a longer time, many Indian states have started easing up lockdowns and reopening economies. Despite the rising number of COVID-19 cases several state governments have already allowed economic activities to boost employment and revenue during Lockdown 4.0 from May 18-31.
American investment bank, Goldman Sachs, has predicted that India might see worst recession since 1979 in 2020-21 due to COVID-19 pandemic and impact of lockdown on industries. Indian economy is expected to shrink by 45% on an annualized basis in Q1 of fiscal 2020-21 and its GDP will slump 5% this fiscal year, which would be its steepest contraction in 41 years. However, India’s GDP will rebound by 20% in Q3 of the year once economic activities are back on track post lockdown.
Even as everyone tries, not much could be predicted before the lockdown is lifted or Coronavirus pandemic gets under control. The weak global outlook could pose an imminent threat to India’s economy or could prove to be a game-changer. Only time will tell if India went into worse recession in 1979 or it went ahead unaffected.