Can the Indian economy stand the test of the Corona outbreak?

March 27, 2020
Can the Indian economy stand the test of the Corona outbreak?
Once the coast clears, it is not sure if things will go back to the same way it used to be. Predictions by major world-renowned analysts have revealed a darker side to this global outbreak caused by the Coronavirus. The world is facing what most are rather uncertain and worried than feeling faith in what is to come. In just mere number of weeks, this pandemic had swept across the whole world, stopping all forms of manufacturing, sales, toppling over the world share market, disrupting distribution & prevented supply chains from any forms of operations.In fact mere digital marketing services in Kolkata too were not untouched by the implications of this global crisis.


As Saudi Arabia opened taps on price wars on oil with Russia, the world stock market tumbled as investors fled the scene on Monday, March 24, 2020. Saudi Arabia stunned markets with its extensive plans to raise its oil production significantly after the collapse of OPEC’s (the Organization of Petroleum Exporting Countries) supply cut agreement with Russia, a grab for market share reminiscent of a drive-in 2014 that sent prices down by about two thirds. But here things are going not make sense. If we were to really pay heed to what the economists have put together that the true nature of the coming economic effects of COVID-19 will actually be from “reduced spending” will be in all extent more than those coming from disruptions to the supply chains and illness-related workforce reduction, herein stated by almost 52% in average by the same band of experts upon being asked in the congregation. Now, here is the case, almost everybody around the world, almost every government has allowed pardons and extended special laws to enable crisis management encouraged by the officials & representatives of WHO. In Canada, the waiting period for unemployment benefits has been eliminated.In Italy, which is one of hardest-hit novel corona virus areas to date, the government there has negotiated an accord with all of their banks for suspension of mortgage payments etc.


In Italy, which is one of the hardest-hit novel corona virus areas to date, the government there has negotiated an accord with all of their banks for suspension of mortgage payments, etc.


But, there could be a short-term disruption as well as long term-benefit due to the outbreak of the coronavirus (covid-19). The short-term disruption is linked to the global supply chain from China. We can fore say assume that our supply of pharmaceuticals and electronic components are the instant examples where the most disruption is to be expected. Now the question is how quickly we can find a substitute in the supply chain in case of an obvious future. Can we find the right standby in time?


To shine a light on the recent options we have as a nation, for essential electronic components, the problem is that India can’t approach other countries like Thailand and Vietnam because their value chains are also linked to China; therefore there is no ground to play in there. If we were to go to our more popular neighbors, Korea and Japan, the costs will make the appliances uneconomical. But what if this is a boon in the disguise of a mishap?


In the long-term, we have been shown a doorway of opportunity to expand our own factions in the world. It is an opportunity for India to start displacing some of the value chain production from China. Come on! We always know we wanted to win our freedom from the under their reign and win us one in the trade battles with the Chinese. Well, now we have it. Quarantine and isolation have been issued all across the globe, for India, the impact of the Coronavirus could go both ways. Exports to India will slow down as we covered before. But also, sourcing of raw materials will become seemingly more difficult as well. Possibly driving up the prices of many commodities; but it need not stop here. Earlier, India wasn’t able to capitalize on the enough talked about US-China trade war to capture exiting manufacturing business. This time, India has another opportunity. The pandemic has created a huge vacuum in the western world for manufacturing inputs. Let’s put things into perspective first. It is a heck of a good time for our country to attempt to fill-up that vacuum left by them and recapture many of its lost markets.


It could be a time for India to regain its lost momentum in exports. It could be a time for Make in India to shine. Opportunities abound, but for India to be able to capitalise on it, credit has to pick up. If banks don’t start lending, this will be another lost opportunity in a long list of many. We also have a shot at becoming one of the top countries to be manufacturing and exporting drugs.


It is being speculated by a greater number of share market enthusiasts that India could increase its exports by going ultrasonic on productions and fill the gap that has been created by China due the recent COVID-19 infected population. However, India itself is facing a sluggish growth and does not have manufacturing capacity to bump up exports. As like the rest of the world, we did not see the near future that waited us and exploded in just days of first infestation. Moreover, India’s own imports from China do make a small enough dent of 18% of all our total imports. Most of the imported items the list includes even leaving all electrical machinery & organic chemicals for drugs, we have to add nuclear reactors and allied machinery and iron and steel. Since electrical parts and chemicals are the main raw materials for electronics and drugs, the prices of these are expected to go up in the domestic market.


And if we talk about personnel with large scale or small scale businesses, they are at the mercy of their own because it is even worse for them as they won’t get any government assurance of any kind.


Alas, even though the World Health Organisation predicts that the death toll will not waver much from the expected forecast, though, we have to agree to one thing, even though we can’t really beat our competitors in the global market nor can we ourselves as an economy have enough resource to brace for the recession that is going to be caused following the recent pandemic. And the world is going to be at a standstill, for quite some time.


That being postulated, I request all to consider digital marketing as the next step of buffing the crisis.


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