Coronavirus pandemic has impacted our lives in many ways. From mentally to economically this pandemic has proven worst for all of us. The world has witnessed fluctuation in GDP but India’s economy is shrinking by a record 23.9% last quarter—the biggest blow the coronavirus pandemic has dealt with a major economy so far—as a nationwide lockdown and fear of the fast-spreading pandemic strangled expenditure. These figures of GDP are disturbing and it should alarm us all. It is India’s worst decline since 1996 when it started reporting quarterly numbers. According to the latest tally from the Organization for Economic Cooperation and Development India has shown the worst decline among all major world economies that have announced GDP figures for the quarter. The government and its bureaucrats need to be alarmed out of their self-satisfaction and need to do meaning full activities along with Reserve Bank of India to come out of this financial crisis. Not only are the numbers alarming but, the speed at which the challenges have emerged is intimidating. India is even worse off than these figures suggest and we should prepare ourselves beyond than these statics.  It has been more than six months and the pandemic is still escalating in India; 4.5billion cases have been registered so far. So, flexible investments, especially in high-contact services like restaurants, and the associated employment, will stay low until the virus is not controlled.

According to the latest tally from the Organization for Economic Cooperation and Development India has shown the worst decline among all major world economies that have announced GDP figures for the quarter.

Why did India perform so badly relative to other countries?

First, India had one of the world’s most draconian lockdowns. Second, unlike other countries, India was far thriftier in its economic response. And the third reason is that the economy was in a classic balance sheet crisis before the pandemic began. Besides, these worst circumstances one thing that is appreciable Government provided relief of free food grains to poor households and relaxation for EMI submissions. This may give you relief for the first phase but if we will think in a second way these unpaid bills and interests will pile up and even if people start earning, indebted households and small firms will not consume freely. Clearing double EMIs will prove to be more difficult for them. Despite spending over 20% of GDP in fiscal and credit relief measures, the United States is still worried that it will take ages to have that stable graph for the economy. But I wonder how India is holding this chilled nature towards drastic graph of GDP.  Government has to take every action that can move the economy forward without additional spending. All this requires is more thoughtful and creative mindsets. It is also a visible that due to pre-pandemic growth slowdown and the government’s strained fiscal conditions India cannot spend on both relief and stimulus. The only way-out is that government will have to expand the resource envelope in every possible way and spending should be fully monitored and efficiently used. Based on facts and researches here are certain way-out through which we can fight with the worst GDP:

Boosting our Agriculture Sector:

For India Agriculture is a backbone and about 14% of our GDP can recover quickly through this sector. But this Industry must be supported by logistic and storage. The expected normal monsoon this year will help the sector maintain its momentum.

When the threat of the virus recedes, the agriculture industry, the number one contributor to our GDP will start cruising again. We cannot forget the impact of the COVID-19 pandemic but unlike geophysical disasters and wars, the physical infrastructure of the industry has survived without damage.

Agriculture Industry can quickly become operational with new work culture if they have the labour force back and the working capital to restart their business. The government needs to find out a supportive facility for this Industry.

Boosting our Sectorial Industry:

The Micro, Small and Medium Enterprises (MSMEs) sector, contributes 30% of India’s GDP. Due to lockdown, almost all MSMEs are out of action, they are not able to pay their employees and most of them don’t have financial support to re-start their business.

According to a recent announcement the government is contemplating a Rs 20,000 crore relief package for this sector but there are other sectors which need help urgently. Sectors like tourism, aviation, real estate are craving for the attention. These industries can put people back to work and contribute to the recovery of our economy. This all may sound simple but to execute it practically is going to be a big challenge for the government. What is most important for us is to get people safely back to work and that will be possible only when we can provide the best possible healthcare to our citizens.

   

Lower lending rates for business to flourish leading to increased liquidity in the market: 

This is the most import point which needs to be taken into consideration. Indian Reserve Bank offers a high rate of interest to the banks which makes borrowing expensive. Decreasing the rate would allow banks to lend better and aid people to rely on banks for loans easier which will eventually increase the market transactions and will boost the economy.

 

Boost rural spends to generate consumer demand:

The simple model to support the economy is to increase consumer demand. We need to focus on rural areas as it will increase the income of people living there, therefore indirectly increasing the consumption demand from the rural section. You may not know but India’s strength is 90% of the unorganized retail and that is highly fragmented but extremely potential.

 

Think of Simplified indirect tax structure to cover all goods and services: 

In India varied tax with complex structure has always been a difficult issue. GST has favoured the brand and consumers and proved to be a game-changer by simplifying the complete process. On the other hand, there are still some areas where the process is needed to be simplified. The government should consider the recommendations of the Direct Tax Committee to boost the disposable income of households and corporates. Additionally, the GST Council could further simplify the indirect tax architecture by moving to a three-tier slab of 6%, 12% and 18%, while expanding its ambit to cover all goods and services.

 

Besides the above-mentioned steps, the private sector should also be urged to give a helping hand. Cash-rich platforms like Amazon, Reliance, and Walmart could help smaller suppliers get back on track, even funding some of them. The centre should notify shelf-ready projects that are in the National Infrastructure Pipeline for implementation. We have faced several crises in its history which we have put behind us, we will overcome again. This too shall pass.