Coronavirus Pandemic Impact on Indian Economy
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This world is going through this biological war, we all are fighting with the same enemy – Coronavirus.
To protect the spread of this deadly virus among humans, most of the country’s government had decided to impose complete & partial lockdowns.
India is no different – a country of 1.3 billion population was stranded all of a sudden to stop the spread of this virus. But I feel the virus is still doing what is it meant to do. Total Positive Cases were around 500 when the lockdown started on March 22, 2020, and now the figures are 90,000+ as of May 17, 2020.
There may not be much impact on Coronavirus cases but the Indian Economy has been affected a lot because of these lockdowns.
Lockdown means a complete standstill, no work, no meetings, just stay at home and protect yourself through isolation.
So, if you are at home, you’re not earning enough, then you’re not spending enough. This breaks the real chain of the economy because this is how the economy works…
HOW THE ECONOMY MACHINE WORKS by Ray Dalio
In this video, Ray Dalio very beautifully explained all about the economy, we can clearly relate to this and what our governments are doing to manage it.
As it says,
The Amount You EARN, you later SPEND it on the goods & services you need. That amount that you spent is someone else’s Earnings so he EARNS and later on he also SPENDS this cycle goes on and on.
As the economy is at standstill due to lockdown, the earnings have been decreased significantly, so is the spending. Therefore the economy is sloping downwards.
This leads to the tightening of liquidity in the economy, so in such scenarios, the governments and central banks try to lower the interest rate to increase the liquidity in market. This in return also increases inflation.
Due to all these scenarios in the economy, we see stock markets plunge, the Indian Stock Markets index SENSEX fell from it’s high of around 42,000 in Jan 2020 to 31,000 now. It even went to around 26,000 on 23rd March 2020 and recovered from that point.
As various business activities in many states have started resuming in India but there will be a continuous slowdown in the coming months.
But I feel there will be a boom in domestic productions in India as Government is focusing more on it’s ”Make In India” initiative and also encouraging citizen to buy more local goods to boost the Indian economy, this is by far the same measures that China took in the 1990s to boost its economy.
If implemented tactfully the turnaround image of the Indian Economy can be very positive in the coming years.
This will definitely increase the overall sentiment of the country and stock markets will also cheer this as the time will pass by making it fruitful for the loyal equity investors in the long run who are investing more in this downturn too and grabbing the opportunities of being greedy when others are fearful. At this point in time – Are you Greedy or Fearful?
Hi, I’m Managing Director at Gurpreet Saluja Financial Services where I help my investors to invest in mutual funds and achieve their financial goals. I’m also a Value Investor and here I write about Personal Finance & Investing.
