COVID-19 has claimed causalities in thousands and wrecked socio-economic fabric of nations around the world. In India, the situation is not different, despite the severe lockdown measures imposed by the country’s government. According to a new statement from International Management Consulting firm Arthur D Little, India may face job loss of nearly 135 million while another 120 million people are facing acute poverty. This comes right after experts worried about the impending hit on consumer income, spending, and savings. The firm also predicted that the pandemic shall worsen the job market scenario and reduce per-capita income, consumer income, expenditure and savings of the at-risk workers and employees, resulting in a steep decline in the Gross Domestic Product (GDP).
According to the firm’s report titled “India: Surmounting the economic challenges posed by Covid-19: A 10 point programme to revive and power India’s post-COVID economy”, the consulting firm disclosed that India is headed towards a W-shaped economic recovery with a potential GDP contraction of 10.8 percent in FY 2020-21 and GDP growth of 0.8 percent in FY 2021-22.
“An opportunity loss of USD 1 trillion is staring India in its face,” said Barnik Chitran Maitra, lead author of the report and Managing Partner & CEO of Arthur D Little, India and South Asia.
Also as the title suggests, the report further proposes a 10-point programme, to boost recovery, with an estimated spending and investment measures of US$280 billion, supported by policy reforms, and proportionate monetary and liquidity measures to revive, secure and empower a sustainable economic future for 1.3 billion Indians post the COVID-19 period. It shall also enable the survival of small and medium businesses, restarting of the rural economy, and providing targeted assistance to at-risk sectors.
“Unemployment may rise to 35 percent from 7.6 percent resulting in 136 million jobs lost and a total of 174 million unemployed. Poverty alleviation will receive a set-back, significantly changing the fortunes of many, putting 120 million people into poverty and 40 million into abject poverty,” the report said.
“The government recovery programme needs to provide a comprehensive safety net for vulnerable sections and support micro, small, and medium enterprises. Clear policy announcements, comprehensive safety nets and decentralized systems of governance will be essential to not only flatten the curve, but also reverse the economic trajectory” said Ashwini Deshpande, Professor of Economics at Ashoka and Director of Centre for Economic Data and Analysis (CEDA), and one of the co-authors of a counterpoint included in the report.
Barnik believes that for its US$5 trillion vision, a radical economic approach is needed, focused on an immediate stimulus and structural reforms. The Prime Minister’s visionary Atma Nirbhar Bharat Abhiyan is a good start to this new approach.
Furthermore, the report advises that the government should launch “Make in India 2.0” to capture global opportunities, build ‘Modern India,’ accelerate Digital India and Innovation, strengthen global investment corridors with the US, UAE, Saudi Arabia, Japan, and the UK, debottleneck land and labor and transform banking and financial markets in a bid to secure a sustainable economic future for 1.3 billion Indians.
To surmise, India is on the brink of massive economic drought, unless provided with huge funds and financial relief schemes, recovery may seem distant, and at the cost of huge unemployment figures. While the current government is already taking steps to mitigate this crisis, the success of these can only be observed in months to come.