“What is important for us to understand is that India cannot continue in this situation for too long. Because at some point of time, deaths due to hunger will far outweigh deaths due to Coronavirus,” Infosys founder NR Narayana Murthy told business leaders at a webinar on Wednesday.
The country must accept the Coronavirus as the new normal, which is here to stay for some time. The US economy shrunk by 4.5% in the March quarter, the biggest contraction since The Great Recession. And mind it, in the March quarter, the US economy was not all that adversely affected by Coronavirus-caused disruptions. In the June quarter when the full impact of the Coronavirus would be felt, analysts are estimating that the US economy may contract by a massive 30%.
China reported a 6.8% drop in gross domestic product for the March quarter of 2020 compared with the same period of last year. Juxtapose it with the usual 7 to 8% growth China records. The fall in China's GDP for the March quarter will work out to a big 15%.
The disruptions caused to the Indian economy by the 40-day-long stringent lockdown are extensive. The manufacturing sector took the brunt of the lockdown, with closure of factories in all non-essential areas. Even after the exit, the manufacturing sector will take a few more months to return to normalcy, until migrant workers return to work and supply chains return to robust frame.
Services sector in areas like travel, tourism, hospitality, retail, entertainment and self- employed informal sector have been totally crippled by the deserted streets, sealed boarders, closed doors, stopped flights and trains. These segments of the economy which took the brunt of the lockdown, would roughly account for half of the economy. India's GDP for the June quarter could shrink by about 20 to 25%, even if there is no further extension of lockdown.
Around 190 million Indians are employed either in the informal (unorganised) sector or are self-employed, and a significant part of this population is likely to have lost its livelihood due to the lockdown. As per the data put together by the Centre For Monitoring Indian Economy (CMIE), the unemployment rate during the last week of March rose to 23.8 per cent and stayed around those levels in the first week of April.
Power demand has fallen sharply by 17.7 per cent in the post-lockdown period of between March 23 and April 23 as compared to the March-1-to-22 period. With fewer vehicles plying on roads, consumption of petrol fell by 16.4 per cent in March 2020 over a year ago period, according to the data from the Petroleum Planning and Analysis Cell. Diesel, consumed in factories and for plying commercial vehicles, saw a sharper hit as consumption fell by 24.2 per cent year-on-year in March 2020. The fall in the consumption of petroleum products in the month of April' 20 could be even higher.
Arrivals of agricultural commodities at key markets have fallen to a fraction of levels seen before the imposition of nationwide lockdown. As per data provided to the media by Agmarknet, a government portal on agricultural marketing, the total arrivals of major cereals, fruits and vegetables recorded across market centres fell to 3.09 lakh tonnes in the first week of April. This was 55.6 per cent lower than the arrivals seen even a month ago. The nationwide lockdown has impacted cargo movement severely.
The Indian economy was already slowing before it was battered by the Coronavirus outbreak and the lockdown. The adverse impact on employment, manufacturing, supply chains, consumption and livelihoods is grave enough and can't be brushed aside. More bankruptcies are in the offing, triggered by the pandemic.
India sees over 9 million deaths annually due to various reasons, of which a quarter are due to pollution, since the country is the one of the most polluted in the world. “When you look at 9 million people dying naturally, and when you compare it with the death of 1,000 people in past two months, obviously it is not as much as a panic we think it is,” Murthy said.
To flatten one curve, we cannot afford a hundred other curves to be knocked down.
(V Venkateswara Rao is a retired corporate professional and a freelance writer. Opinions expressed are his own)