India is a developing country and its economy is characterized as a developing market economy. It is world’s fifth largest economy by nominal GDP and also its purchasing power parity stood at third position. According to International Monetary Fund the per capita income of India ranked at 139th position by GDP (nominal) and 118th by GDP (PPP) in the year 2019. According to Economic Experts, Indian economy was just 189438 billion dollars in 1980 and subsequently the growth rate increased and Indian economy started growing smoothly. In other words the Indian economy has been growing at an impressive pace since post nineties mainly due to development of industrial and service sector. The Indian economy witnessed macroeconomic and fiscal stability due to smooth economic growth over the years. After demonetization, the Indian economy started showing a downward trend and after hectic efforts the economy started picking up slowly. But due to outbreak of Covid-19 across the globe, the Indian economy has been suffering enormously thereby it resulted into continuous decline of India’s GDP and the situation has really become worrisome. However, it is difficult to estimate the exact damage caused by Covid-19 to the Indian economy. It is believed that the economic activity in India has virtually come to a grinding halt after the announcement of lockdown by Prime Minister Modiji on 24th of March 2020 to check the spread of coronavirus across the country. This shutdown/lockdown has been extended upto May 31st with some relaxations to allow the resumption of economic activities. It is to mention here some businesses and factories started resuming their operations after observing all the prescribed guidelines issued by the Government from time to time. The Indian Economy had last contracted in 1980, when the Gross Domestic Product (GDP) shrank 5.2%. According to latest survey conducted by economists, it is usually believed that Indian economy will shrink to 0.4% in the year as a result of steps taken to combat the coronavirus pandemic.
Still some economists believed that India’s economy will start picking up once the restrictions are lifted but India has to adopt a social distancing economy to prevent the re-occurance of the coronavirus pandemic. India’s fiscal deficit is said to be around 5.5 %of GDP upto March 2021 as the Government has decided to go for extra borrowing necessitated by steep fall in collection of revenue and also on account of unscheduled spending.
Therefore, Prime Minister Modi is facing daunting task of reviving the economy that has witnessed contract for the first time in four decades. Small and medium sized firms are facing the brunt of the slowdown in demand. Even Moody’s investors service maintained that Indian Economy will not grow as projected during the current financial year owing to deep shock triggered by the coronavirus outbreak.
However, Moody’s expects that there will be a bounce back in economic activity and accordingly it is forecasted that Indian economy will witnessed a growth of 6.6% after the end of this financial year. On the basis of revival of economic activity and also demand in the second half. No doubt the Government has announced economic stimulus package to support the economy but it will take time to bring the economy back on track. As the coronavirus lockdown is causing great disruption across multiple sectors, including manufacturing financial and others.
It is also believed that the continuous lockdown and restrictions on commercial activities as well as gathering of people are likely to have a significant impact on the global and domestic growth from March 2020 onwards. But Government spending will remain the key factor to India’ s economic growth. A revival in the GDP growth rate will be key to the growth of Indian Economy. India has unexpectedly slashed Repo Rate and it is believed that it has impacted small savings. Further, Indian rupee has witnessed depreciation on account of escalation of US-China tensions.
Agriculture, forestry and fishing sector employees more than the 50%of the labour force. The manufacturing sector accounts for approximately 15 to 20% of GDP followed by construction sector which accounts for 8% of GDP. Likewise, gas, electricity, mining, quarrying and water supply accounts for 5% of GDP. The Central Government under Sh. Narendra Modi is striving hard to strengthen the fundamentals of Indian Economy in the coming days. It is believed that India’s economic growth is expected to rebound in case the Government expedites the process of Economic Reforms at ground level. It is expected that Indian Economy will recover dramatically due to sector-specific demands in near future. In case, the lockdown gets extended, it would no doubt create more pressure on our financial system but with patience, perseverance and discipline India could again write their success story in near future. To give boost to economy, Indians are required to take pragmatic steps with optimistic approach in order to minimize the impact of Covid-19 on Indian Economy and growth. Under Prime Minister Modiji India is expected to cross all hurdles coming in the way of economic revival and growth in days to come.