BY:RIFAT QAYYUM

This year has been the worst year ever and still being the worst. We all  ended year 2019 on a very good note thinking 2020  will be better , but unaware about  its “ scary arms”  , which  has squeezed us to no end in every aspect. Stranded labours , unemployment , economic slowdown, poverty etc are few of the terms which we have heared often  during this time.

Economic slowdown  has been in talks from 2019 as GDP growth declines from 7% to 6.9% and keeps on declining. It even came came to 4.2% according to IMF , lowereing the India growth. It was aleardy announced by IMF that whole world is going to face the economic slowdown and India will be the most effected country  , which came true , India ‘s GDP growth is  at lowest from 2019  and corona pandemic has added more to it. Automobile sector was worst hit in 2019 due to lack of demand and the employees were either downsized or retrenched. Inflation shoot ups were also contributing to the downfall especially food inflation which was 7.35% in December 2019 , retail inflation was five – year high of 7.3%. The solutions were given by the  great scholars to increase demand , production , employment , investment , to put more income in the hands of farmers , to spend more on infrastructure , to invest more in  mgnrega scheme which will be benificial for the stranded labours. But  the government is spending less which is a conflict , “To increase the Public Investment is the solution” .

Next year which is 2020, came with the corona pandemic muddling the structure of economy and drived our economic growth  in negative . It has affected all the sectors in the worst way , so, divided in the groups A, B, C ,D .

GROUP A

This group suffered limmited  disruption  and possible to give 90%  contribution in the 2019-20  growth performance. Sectors included in it are :

1.Agriculture

2.Allied sectors

3.Public Administration

4.Defence and other services

In Agriculture sector  , rabi cropped currently harvested and good monsoon was predicted , we can see the results.

In Allied sectors , there are labour shortage issues but the performance is normal.

In Defence and Public Administration sectors , both are fully active at forefront of covid-19 fight.

GROUP B

 This group suffered average disruption and contributed 50% in 2019-20 growth performance. The sectors included in it are :

1.Mining and Quarrying

2. Electricity , Gas , Water supply

3.Other utility sources

4.Constructional and Financial , Real estate and Professional services.

GROUP C

This group suffered significant growth  erosion in 2019-20 contributing only 40% in the performance growth on the year 2019-20.it can only be stimulated by supporting demand.manufacturing sector contributing only 17.4%.

GROUP D

This group suffered the maximum disruption and contributed only 30% in 2019-20 growth performance. The sectors included in it are:

1.Trade , Hotels , Restraunts

2. Travel and Tourism

3. Communications

It has been 6 months we are fighting against covid-19 . Recent changes came in  theese sectors . Lets see whether the outlook is still negative or has become positive.India was at fifth highest covid-19 fatalities in the world , but , now India’s fatality rate is among the world’s lowest. Currently it is standing at 2.18% which is lowest globally. Recovery rate of India is 64.54% which is a positive sign. More than half of the total cases are from metropolitan cities, Delhi , Mumbai , Chennai , Kolkata , Bangalore , Hyderabad which are on top. Delhi ‘s recovery rate being 89.08% , Haryana 79.82% , karnataka 39.96% which is lowest among all . Telangana , karnataka , Andhra Pradesh are the states with highest number of cases increasing everyday .

Turning back to sectors ,

Core sector ‘s output shrinks 15% in june , this contraction is showing some recovery from the 22% fall in may. In april june 2020 , the sector’s output dipped by 24.6% with a positive growth of 3.4% in the same period.

Fertilizer  industry saw an actual growth in june, the output is rising at 4.2% in comparison to june 2019 but lower than the 7.5% growth of may 2020.

Agriculture sector  has shown a positive outlook   as normal monsoon is leading to the expectations of a bumper kharif crop.

Steel  industry  has shown contraction with 33% drop in production in comparison to previous year , still remains the worst  performer .

Cement industry  production fell almost 7% , showing improvement from the contraction of 22% seen in may.

Energy sector  has shown negative growth , coal production  falling 15.5% , crude oil and natural gas production dropping 6% and 12% respectively.

Petroleum refinery  production carries the greatest weight in the core sector  and contracted almost 9%.

Electricity  sector  generation has  dropped to 11% .

CHANGES IN THE POLOCIES OF  BANKING SECTOR

  

MONETARY POLICY

RBI reduced the Repo rate to 4.4% , Reverse repo rate to 3.75% and Cash reserve ratio to 3%.

Repo rate is the rate at which RBI lends money to commercial  banks for a shortfalls .  

Reverse repo rate is the rate at which commercial banks  lends money to rbi .

Cash reserve ratio is the minimum  fraction of total of deposits of consumers which commercial banks have to keep with central bank either in the form of cash or as deposits.

Theese are the  monetary instruments which helps  to revive the economy to reduce inflation by freezing the money and controlling money supply.

IMPACT ON FISCAL DEFICIT

1.Releif expenditurec for protecting poor and marginalised

2.Demand supporting expenditure for increasing personal disposable incomes

3.Health care sector expansion , more investment on its infrastructure.

This much has impacted covid -19 to our sectors which were aleardy in the downfall during economic slowdown of 2019.