Indian economy struggling to recover despite lockdown relaxations, Possible reasons inside
The economy still not up and running despite Unlock 2.0
India is currently under the unlock 2.0 phase of coronavirus lockdown with limitations only on select services. Even after 6 weeks of lockdown relaxations, the economy doesn’t seem to be coming back on tracks. There is no certainty about the coronavirus cases when it will peak when the curve will come down or even when a vaccine is found. This uncertainty has upset the chances of an energetic and steady resumption of normal business activity. Every now and then, some state, city, district enforces some kind of newer limitations.
The economic stress continues to build with each passing day, week and month as the economy is working well below its own potential. This ultimately results in less earning of individuals which then holds back the consumption.
Uncertainty about the coronavirus troubling Indian economy
People are so uncertain about the coronavirus that they are not spending as much money to revive the economy. They want to save money so that they can use it in difficult circumstances including getting hospitalized due to COVID-19. There are either not enough beds in government hospitals, COVID centres or the facilities in government hospitals are not up to the mark. This is making people choose private hospitals but they are charging a lot of money.
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Less expenditure of people has made the businesses wonder, should they be investing more money to ramp up the production or stay put. It also confuses banks about giving new loans looking at the fact that many previous loans are now turning into non-performing assets (NPA).
RBI Governor Shaktikanta Das even raised this concern recently and said that there is a possibility of higher NPAs and capital erosion of banks, both private and public.
Despite unlock 2.0, people are not coming out to buy
Many people who lost their jobs in the unorganized sector have resumed working but still, a huge number of people are unemployed. Although various shops have been opened in the unlock 2.0, shop owners are struggling as there is a gap in supply and demand because of the pandemic.
The train services are still to resume in full capacity, metro services are still not running and International flights are also limited. This has limited the revenue generation of the Government despite the unlock.
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