COVID-19: the death or the rebirth of India?

Simrit Anand, Print Staff Writer

January 18, 2022

In India, there has been a significant impact on sectors such as aviation, tourism, retail, capital markets, MSMEs, and oil. A lack of travel and tourism, which normally contribute to a large part of the GDP, have taken a toll on the GDP growth rate. The Indian currency “Rupee” is continuously depreciating. In India the primary worries  are of loss of job, daily ration, and absence of a social security net. COVID 19 has also provided some unique opportunities to India. There is an opportunity to participate in global supply chains, due to multinational organizations losing trust in China. Could we potentially see “Made in India” labels on products we buy abroad? But before India could potentially rebuild their economy with capitalist expansion and the trust of multinational organizations they must recover from the significant impact on major sectors as well as stabilizing the livelihood of citizens (i.e. job loss, security). India, a nation already filled with major social inequalities has suffered greatly due to Covid-19. Covid-19 has pushed India to think of ways to recover from this big hit. The Covid-19 pandemic affected many different sectors throughout India.The economic stress has started and will grow rapidly. While lockdown and social distancing result in productivity loss on the one hand, they cause a decline in demand for goods and services by the consumers in the market which leads to a collapse in economic activity. According to the International Labour Organization many people in India are in low-paid jobs, who have experienced a sudden loss of income due to Covid-19. The aviation and tourism industry is the worst affected internationally. In India, the travel and tourism industry is a large part of the economy. The lack of job security and unemployment has only increased inequality in the country. Covid-19 of has worsened poverty and social exclusion of vulnerable populations struggling to overcome this sudden crisis. The government will have to work toward social reproduction and economic production to fix the damage caused by Covid-19. The biggest step that India can take is try to rebuild itself and potentially tailor its position to a place internationally renowned for consumer products. Slapping Made in India labels on products will help rebuild the economy and potentially provide many jobs for the poor.

India has exceeded more than 10 million covid-19 cases and the virus doesn’t seem to be slowing down. India has always had a massive wealth gap between the wealthy and the poor. The poor are very poor and the rich are very wealthy. The virus has made it next to impossible for the poor to survive in India. This avidly represents the inequality and social reproduction problem in India. The lack of job security and unemployment has only increased inequality in the country. A large part of the employment market is house help and street selling, the lower income class of India is significantly employed in these jobs, but due to lockdown and social distancing rules house help isn’t needed and there aren’t as many people buying merchandise on the streets. The livelihood and income safety-net of lower income class has been greatly threatened. Due to no income during these difficult times these families are starving to death if not from the deadly virus itself. Covid-19 of has worsened poverty and social exclusion of vulnerable populations struggling to overcome this sudden crisis. India like every other nation is walking on a tightrope and hanging on by a thread when it comes to dealing with this pandemic. CBS news in India has interviewed laborers such as Abdul Aziz and Sudhakar Kumar. Aziz would normally be driving a rickshaw for money but due to government lockdown protocol, he’s been out of work, similar to Sudhakar who worked as a daily laborer for a wealthy family, who is now out of work and is living with his wife and two children on a sidewalk in New Delhi begging for food and money. Both of these men are prime examples of how Covid-19 has effectively ruined the lives of the Indian lower-class. In difficult and trying times like these prime minister Narendra Modi has prioritized containing the virus over livelihood and economic stability of the lower class, which is a difficult decision because the virus would kill the lower class but the fact is they are dying regardless due to lack of income and access to basic necessities like food and clean water. According to the International Labour Organization, about 400 million people (76.2% of the total workforce) working in the informal economy in India are at a risk of falling deeper into poverty due to catastrophic consequences of the virus.

Besides the negative effects on the lives of the lower class India is also facing major economic downfall due to the depreciation of the overall GDP growth rate. India must recover from the significant impact on major sectors as well as stabilizing the livelihood of citizens. Many sectors which in the past have been the source for economic production have suffered because of this pandemic. Industries such as travel and tourism have seen a major decline in the money being brought in. Due to restricted flights and lockdown, no one is travelling to India, resulting in a huge loss and downfall for the economy. According to Mohan, tourism in India accounted for 9.2% of GDP, therefore due to the Covid-19, the economy has suffered. The aviation sector in India currently contributes roughly US$72 billion to India’s GDP, and with this major decline, the government is finding it difficult to contain the virus as well to keep the economy running. Every country in the world has taken a major hit to their economy and everyone is trying to figure out how to survive. The problem is India, a country with an already massive income difference between classes, has taken a bigger hit which has driven people into poverty, as well as made it hard for the country’s economy to run smoothly.

In the short term, the economic recovery will be bumpy at best and will be driven primarily by agriculture, consumer products, and pharmaceuticals. Four factors will play a decisive role through rebuilding but this obviously is assuming that the spread of the virus can be controlled by then. First, consumer demand has been decimated due to the unfettered rise in Covid-19 infections, government and self-enforced lockdowns, and reduced average spending power due to layoffs and pay cuts. Hence the speed of recovery will depend on how quickly consumer demand increases, especially for discretionary items. Second, rising consumer demand also needs to be simultaneously accompanied by an increase in demand for capital goods. Third, with increasing variability of enforcing and easing localised lockdowns, the pressure from the demand side exerted on the supply side will increase, pushing the already fragile supply chains to the brink of collapse. 

India is now slowly trying to rebuild itself but it is difficult. Which is why it is important to look at other ways and channels of raking income in and rebuilding the economy. There is an opportunity to participate in global supply chains, due to multinational organizations losing trust in China. Could we potentially see “Made in India” labels on products we buy abroad? An opportunity like this will not only help create job opportunities for the lower income class but help rebuild the economy. It is a possible solution to both of the problems that India is currently facing as a result of Covid-19. The social inequality which has become more apparent due to this pandemic has shone a light on the life of labourers and how they are surviving. Commodity production in India will help get the economy moving again, but as I mentioned before everything has to be done in steps and proper time because containing the virus is the Indian government’s current priority.