All nations have greatly been impacted during the pandemic, though India has a unique case. The sheer size of India presents a logistical nightmare during the process of recovery and rebuilding its economy. Additionally, having close to 100 million people living in poverty does not help.
In 2019, India’s GDP (Gross Domestic Product) grew 4.23% from the previous year. The pre-coronavirus estimates forecasted India having a 5% GDP growth rate during the year 2020. A recent forecast presents a much more grim future as it expects the GDP to decline by 5.77% during the year 2020.
The decline in productivity mainly has to do with the fact that India is experiencing one of the greatest recessions it has ever seen, which in turn was caused by the coronavirus and the lock-downs. This, along with the uncertainty people have for the future, led to a decrease in inflation and productivity.
The key factor in analyzing the future of India is the longevity of the coronavirus pandemic. The longer the health risks of the pandemic outweigh the economic risks, the more severe the economic outlook will be. As more time, effort, and resources go towards combatting the pandemic itself, less money will remain to rebuild the economy.
The unemployment rate in India maxed out in early May at 24.55% and has slowly been recovering since, reaching 7.7% in early August. In the previous 4 years, unemployment figures have been hovering around 5.3-.5%, and Indian economic forecasts show the country to reenter this range in mid-2021.
In late March, Prime Minister Narendra Modi announced a stimulus package to India of $265 billion, about 10% of the country’s GDP. Though in reality, Indians have only received a tenth of the stated package or 1% of the country’s GDP. This came as a surprise to economists and grew to be quite concerning, as this was not nearly the amount other countries were spending. In hindsight, this was very beneficial as though economic productivity in India’s fast-growing economy halted significantly (45% GDP drop in the 2nd quarter), as the future was not certain caution prevailed and allowed for Modi and his advisors to realine the priorities of the nation. The real problem was the lockdown itself and not about fixing the economy.
The government directly addressed the problems that had surfaced amidst the pandemic, instead of just throwing money at them. This allowed for more direct contact between the government and people to provide proper solutions to problems and cautioned spending. This greatly differs from the United States’ spending, whose government pumps trillions into the economy and does not address the problems directly. The money that was saved by this precautious spending would later be used to combat the disease itself and help the people afflicted by it. And due to Modi’s planned spending, India may not be in as much debt as other nations.
Benefiting From Technology
The coronavirus has shown which companies and industries can adapt and bring themselves into the future with the utilization of technologies, and which ones will be left behind as a result of not adapting. Many more companies are now realizing they can have their employees work remotely, especially in the information technologies sector. For India, this is a major win as they have been a key player in outsourcing and information technologies, which can allow for these horrible circumstances to present a new venue for growth and expansion.
Tata Consulting Services or TCS, a significant player in the tech field, is a prime example of this growth. As stated in TCS’ annual report, “digital channels as a means for business have gone from secondary options to primary and sometimes the only options for business amidst the pandemic.”
“With cloud and a new class of collaboration tools, people are discovering that they are able to collaborate with each other just as well working from home, as they did in person in the pre-COVID era”, N Chandrasekaran, chairman of Tata Group, said in the annual report.
TCS used the pandemic to launch the “secure borderless workspace model” and maximize the potential of their employees while providing them the freedom to work as they wish during the pandemic and in future times. The model pushes for the heavy use of digital network collaboration tools, allowing individuals to work remotely and stay connected with coworkers around the world. This change in the working environment and work process is allowing TCS to venture into new avenues of growth and expand its power and influence through innovation. Many companies in India and around the world have since followed this location-agnostic operating model.
Beating Out China?
As trust in China hits its lowest after multiple trade wars, misinformation, and human-rights complaints, India may be the new international manufacturing hub and supplier of goods for multinational corporations. This is coupled with the fact that India has started construction on the Delhi-Mumbai Industrial Corridor (DMIC), which plans to connect Delhi and Mumbai with a high-speed rail system to efficiently transport people and freight between the 2 cities. Additionally, it will form a corridor in-between 24 investment-based and industry-based cities to increase the economic productivity in the region.
India has taken a lot of the right steps during the coronavirus; limiting spending by addressing problems directly, innovating the work process model, and continuing large infrastructural projects to provide some economic stability. Even still with all of these correct steps, India has amassed over 2.2 million cases which are just increasing day over day, and India’s pre-COVID exponential economic growth will not resurface until there are stability and large rebuilding efforts to avoid another recession. All in all, it seems as though steps that are taken with ingenuity and outside-the-box thinking have shown the best results in economic recovery, the way that the country has utilized the pandemic for growth is something other countries should try to replicate in order to revitalize their economies.