Second wave, Second Economic crisis.

Prof. S. Thilak, Assistant Professor, SIMS

According to IMF India is ranked 142^nd by GDP in 2020 till 2017-2018 the average annual GDP growth has been 6% to 7%. After 2017, the economy slowed down due to the blow of demonetization and Introduction of GST in 2017. According to the World Bank India hold the 7^th position sorted by their Household final consumption expenditure(HFCE) in the year 2019.Indian economy is expected to grow 8.9% in the fiscal year beginning of April 2021. The NSO predicted that the economy will increase to 7.7%. Indian economy suffered a severe recession during the pandemic situation. The worst period are from March to August 2020, during the period of June quarter GDP has been recorded upto 23.9% and it came down by7.5%in September quarter.

So fact is that the GDP development estimates have outperformed most estimates made by different financial specialists and rating agencies, the government has left a condition that the figures can be updated as the current data is lacking. With the arrival of GDP development, the entire year 2019-20 GDP development remained at 4.2 percent. The government has revised down the GDP development in Q1, Q2, Q3 and Q4 to 5.2 percent, 4.4 percent, 4.1 percent and 4.2 percent respectively. As India goes through the path of financial vulnerability, the GDP growth in the final quarter gets significant as it incorporates the figures for multi week of lockdown. It is also expected that current data will help to determine the impact of the pandemic more clearly. Meanwhile, the development pace of eight core industries for Feb 2021 fell by -38.1 percent, compared with a fall of 9 percent in March 2020. The yield of power fell by -22.8 percent, while the yield of cement fell by 86 percent; steel by 84 percent; manure by 4.5; treatment facility by 24.2 percent; raw petroleum by 6.4 percent; and coal by 15.5 percent in Feb 2021.

The pandemic has sent oil prices plummeting, leaving oil companies with portfolios of existing and prospective projects with more outgoing expenses than income generated. In quick succession, both BP and Shell announced plans for massive write downs on some of their fossil fuel assets. Chesapeake Energy has­led for bankruptcy protection and Dividends have been cut, job losses are expected, and a number of top energy companies have publicly announced plans to accelerate their clean energy transition. Economic recovery is never sustainable if it is built upon the economic hardship of certain groups. With a view to achieving recovery without leaving no-one behind, international cooperation to alleviate short- to mid-term hardship faced by people working in oil-producing industries would be essential.

India’s industrial production and consumption expenditure have been recovered. But business activity in India declined as the Second wave of the pandemic which was spreading beyond many states. The NIBRI (Nomura India business Resumption Index) has declined to 95.1 in March 2021, during Feb 21 it was in the peak of 99.3, which take into account of various high frequency like Mobility, Labour and Power. All the top level business like Google, Apple etc., index have fallen by 3.7, 2.6 subsequently. The second wave has knocked the retail and recreation mobility by 0.3pp week by week. So, the economy is still under the process of recovery and the government has to seriously consider the future economic policies and implementation during the period of second wave of corona virus because this may lead to the economic crisis, creating more unemployment, scarcity overall it will be the country’s economic disaster and spoils the fate of the nation.