There these five hurdles which our Economy faces and to put cherry on its top the coronavirus pandemic has weakened all sectors of the Indian economy since April and a recovery seems unlikely this year. From contraction in growth to rising inflation and unemployment, challenges are aplenty. Coronavirus cases make the case for recovery worse.
Stagnated demand seems to be the biggest challenge for the economy at the moment. Demand for key goods and commodities like fuel, food, consumer goods and electricity has fallen over the last few months.
The latest unemployment figures, released by the Centre for Monitoring Indian Economy (CMIE), are another evidence of economic weakness. The CMIE data show that nearly five million or 50 lakh salaried jobs were lost in July, taking the total number of layoffs in the formal sector to over 1.8 crore.
Experts say most informal businesses depend on the cash flowing from the formal economy i.e. salaried jobs. The economic situation could worsen further if more salaried jobs are lost.
Lack of fiscal stimulus
Many noted economists have made it clear that India needs another round of fiscal stimulus to support growth. While the government, at the start of the pandemic, announced a fiscal stimulus package of nearly Rs 21 lakh crore, most of it was focused on bank credit for businesses.
Rising inflation has complicated the economic situation further. In July, retail inflation rose to 6.93 per cent, way above the RBI’s medium-term target of 4 per cent.
Economists say it is an unusual situation where prices of food items like vegetables, pulses, meat and fish are on the rise despite weak demand.
Surging coronavirus, lastly, made it all worst.
Picture credits – Times of India; Content credits – Economic Times