Our pandemic-hit economy will continue to misfire for some time but that doesn't mean analysts can write us off
A report by the global forecasting firm, Oxford Economics, predicting that India will be one of the worst-hit economies even after the worst impact of the pandemic is beyond us, has given Government baiters a new stick to beat it with. However, one must remember that several previous predictions of doom and gloom for India, either in terms of its caseload and number of deaths, has been proven to be premature fear-mongering. While the economic relief packages have been admittedly coming slow and staggered, one must not forget that several prominent economists have argued that India has not rushed into any action and is waiting out to see what long-term impacts the Coronavirus will have before taking major action on reviving aspects of the economy. Currently, some structural reforms have been made to spur development. So one should treat all reports of what will happen four years in the future with a major pinch of salt.
It is true that manufacturing and services have been hard hit by the pandemic and while ratings agencies and the Government might quibble about the exact figures, India’s economy will contract by around a tenth this year. Many sectors, such as aviation, travel and tourism, will take a good five-six years to return to prosperity that they had known and we are yet to see the worst of the jobs impact on the economy as various moratoriums come to an end. There are slight glimmers of hope though, including increased car and two-wheeler sales over the past few months. But there is also no doubt that a new tsunami of cases is upon us, whether we recognise it in the data or not, particularly in Delhi where public carelessness might have a fatal impact with specialised hospital beds beginning to run short. This has led to much speculation that Government authorities in India, like their counterparts across Europe, might need to declare a second shutdown. It would be prudent for forecasting firms, none of which saw the pandemic coming, to wait and watch as well and at least wait until the worst of the Coronavirus is past us before sounding the Doomsday alarms.