To the Indian economy, the coronavirus pandemic is a perfect storm, but India has an exemplary record in handling such storms. We also handled the 1997 Asian financial crisis, the post-Pokhran nuclear sanctions, the dot-com bubble and 9/11 and the global financial crisis of 2007-08 over the last three decades. Despite these difficult circumstances India retained both its macroeconomic stability and its growth trajectory.
Coronavirus spread in India started relatively late as compared to other countries. The coronavirus epidemic ‘s trade effect on India is estimated at about $348 million, and the country figures among the top 15 economies most affected as a manufacturing slowdown in China disrupt world trade, according to a UN survey. The trade impact for India is projected at $129 million for the chemicals industry, $64 million for textiles and apparel, $34 million for the automotive sector, $12 million for electrical machinery, $13 million for leather goods, $27 million for metals and metal goods and $15 million for wood products and furniture.
Former Finance Minister P. Chidambaram has proposed a slew of steps the government should take to assist the industry, including more tax cuts and easier loan terms. Sharad Kumar Saraf, president of the Federation of Indian Export Organizations, said the government would immediately announce a relief package for exporters, as any more delay will be disastrous, with the cancellation of more than 50 per cent of orders, dim forecast, significant job losses and increasing bad loans between exporting units. “The enormous support provided to exports by different economies would put Indian exports in more trouble, because when the size of the cake decreases, competition intensifies with a emphasis on costs,” he added.
Considering the severity of an uncontrolled outbreak, the government has taken a timely decision on a full shutdown to carry out social distancing effectively. While there is no question that life needs to be given priority over the living, it is now important to start talking about reviving the economy once we have addressed the pandemic ‘s health aspect. Although we face much uncertainty in the times to come, India will do well to expect changes in global trade and investment and be prepared to proactively reorient its policies to leverage the opportunities that that emerge from the current challenging situation.