{"id":71048,"date":"2020-09-15T18:40:34","date_gmt":"2020-09-15T13:10:34","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=71048"},"modified":"2020-11-26T18:42:06","modified_gmt":"2020-11-26T13:12:06","slug":"indian-economic-recovery-unlock-phases","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/indian-economic-recovery-unlock-phases\/","title":{"rendered":"Indian economic recovery \u2013 Unlock phases"},"content":{"rendered":"<p><strong><b>Source-\u00a0<\/b><\/strong><a href=\"https:\/\/indianexpress.com\/article\/opinion\/columns\/gdp-contraction-indian-economy-6587087\/\"><strong><u><b>The Indian Express<\/b><\/u><\/strong><\/a><strong><b>,\u00a0<\/b><\/strong><a href=\"https:\/\/indianexpress.com\/article\/opinion\/columns\/indian-economy-negative-growth-gdp-contraction-6587115\/\"><strong><u><b>The Indian Express<\/b><\/u><\/strong><\/a><\/p>\n<blockquote><p><strong><b>Syllabus- GS 3-\u00a0<\/b><\/strong>Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment<\/p><\/blockquote>\n<p><strong><b>Context<\/b><\/strong>\u2013 India\u2019s economy shrank nearly 24 percent in first [April-June] quarter of 2020, the most drastic fall in decades.<\/p>\n<p><strong><b>Reasons for GDP contraction<\/b><\/strong><\/p>\n<ul>\n<li><b><\/b><strong><b>Draconian lockdown<\/b><\/strong>\u2013 India had the most intense lockdown starting from March 25, resulting in the unprecedented suspension of economic activity in the first quarter of this fiscal year.<\/li>\n<li><b><\/b><strong><b>Parsimonious fiscal response<\/b><\/strong>\u2013 Fiscal response of the free food, subsidized credit and a handful of transfers to the most vulnerable not only limited the contribution of government spending to the economy, but was also insufficient to offset the drag caused by households and firms scaling back consumption and investment.<\/li>\n<li><b><\/b><strong><b>Low growth rate in consumption, investment and export<\/b><\/strong>\u2013 GDP is contracted because Private consumption, investments by businesses and Import which account for over\u00a088% of Indian total GDP, saw a massive contraction.<\/li>\n<\/ul>\n<p><strong><b>Advantages of early lockdown-<\/b><\/strong><\/p>\n<ol>\n<li>Slowed down the spread of the virus to provide extra time to resist.<\/li>\n<li>Provided extra time to ramp up the health and testing infrastructure.<\/li>\n<li>Lower death count as compared to other affected countries.<\/li>\n<\/ol>\n<p><strong><b>Figure regarding GDP decline due to COVID-19, economics green shoot and recovering economy in unlock phase-<\/b><\/strong><\/p>\n<p><strong><b>Figure 1-<\/b><\/strong><\/p>\n<ul>\n<li>GDP being 23.9 per cent lower was primarily due to the pandemic-induced lockdown.<\/li>\n<li>India\u2019s death per lakh is an order of magnitude is lower.<\/li>\n<li>India\u2019s humane economic policy based on the principle that while GDP growth will recover \u00a0but human lives that are lost cannot be brought back.<\/li>\n<\/ul>\n<p><strong><b>Figure 2-<\/b><\/strong><\/p>\n<ul>\n<li>The green shoots before the pandemic display that the government\u2019s policy thrust since July 2019 was having the desired impact.<\/li>\n<li>The services sector has been most affected by the need for\u00a0social distancing\u00a0and the lockdown.<\/li>\n<li>The purchasing managers index (PMI), had trended up sharply with Services PMI registering the best growth by February before dropping precipitously below 50 per cent in March.<\/li>\n<\/ul>\n<p><strong><b>Figure 3 and table1-<\/b><\/strong><\/p>\n<ul>\n<li>The V-shaped recovery in these indicators suggests that the government\u2019s measures are enabling a recovery in the unlock phase.<\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-65177\" src=\"https:\/\/i0.wp.com\/blog.forumias.com\/wp-content\/uploads\/2020\/09\/Picture1-9.png?resize=759%2C370&amp;ssl=1\" sizes=\"auto, (max-width: 709px) 85vw, (max-width: 909px) 67vw, (max-width: 984px) 61vw, (max-width: 1362px) 45vw, 600px\" srcset=\"https:\/\/i0.wp.com\/blog.forumias.com\/wp-content\/uploads\/2020\/09\/Picture1-9.png?w=759&amp;ssl=1 759w, https:\/\/i0.wp.com\/blog.forumias.com\/wp-content\/uploads\/2020\/09\/Picture1-9.png?resize=300%2C146&amp;ssl=1 300w, https:\/\/i0.wp.com\/blog.forumias.com\/wp-content\/uploads\/2020\/09\/Picture1-9.png?resize=150%2C73&amp;ssl=1 150w\" alt=\"\" width=\"759\" height=\"370\" \/><\/p>\n<p><strong><b>Different Phases to return to normalcy-<\/b><\/strong><\/p>\n<ol>\n<li><b><\/b><strong><b>Gradual unlocking<\/b><\/strong>\u2013 Gradual process of unlocking, with supply-chain normalization and pent-up demand resulting in faster sequential momentum.<\/li>\n<li><b><\/b><strong><b>Exiting from the lockdown<\/b><\/strong>\u2013 The post-lockdown pent-up demand typically fades, while operations plateau below the pre-pandemic levels<\/li>\n<li><b><\/b><strong><b>Exit path from the pandemic<\/b><\/strong>\u2013 Going back to pre-pandemic levels either through the flattening of the curve, the emergence of vaccines or the development of herd immunity.<\/li>\n<li><b><\/b><strong><b>Post-pandemic new normal<\/b><\/strong>\u2013 Fourth phase in which potential growth settles lower<\/li>\n<\/ol>\n<p><strong><b>Way forward-<\/b><\/strong><\/p>\n<p>Coordinated fiscal and monetary policies are required to finance higher deficits.\u00a0The RBI has focused on support via liquidity in secondary markets and other regulatory measures to bring yields down, flatten the yield curve, and incentivize banks to buy more government paper.\u00a0Debt monetization, as Indonesia has already done, might be the second round of defence in coming months.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Source-\u00a0The Indian Express,\u00a0The Indian Express Syllabus- GS 3-\u00a0Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment Context\u2013 India\u2019s economy shrank nearly 24 percent in first [April-June] quarter of 2020, the most drastic fall in decades. Reasons for GDP contraction Draconian lockdown\u2013 India had the most intense lockdown starting from March&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/indian-economic-recovery-unlock-phases\/\">Continue reading <span class=\"screen-reader-text\">Indian economic recovery \u2013 Unlock phases<\/span><\/a><\/p>\n","protected":false},"author":10311,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230],"tags":[1284],"class_list":["post-71048","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","tag-eco_2","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704827358},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/71048","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10311"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=71048"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/71048\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=71048"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=71048"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=71048"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}