The Indian economy will find it difficult to recover from the slump following the pandemic and the lockdown. Unemployment is set to rise from 7.6 per cent to 35 per cent. According to a report by Arthur D Little, an international management consulting firm, about 120 million Indians may be staring at poverty and 40 million at abject poverty. About 135 million jobs may be lost, leading to a total of about 174 million unemployed in the country.
If millions of jobs are lost as forecast, the income of the consumers will be deeply impacted and so will their affordability, spending and savings. Not only will there be more poor in the population, there will be a huge drop in per-capita income, which will lead to a drop in the gross domestic product (GDP). The GDP for the financial year 2020-21 is expected to witness a “contraction of 10.8 per cent”. The report reveals that there will be “GDP growth of 0.8 per cent in FY 2021-22.”
The report titled ‘India: Surmounting the economic challenges posed by COVID-19: A 10-point programme to revive and power India’s post-COVID economy’ states that the only way to help the situation, is to roll out a 10-point programme to quicken economic recovery. This should include providing a better ‘safety net’ for the most vulnerable rungs. It is essential to lend support to the small and medium businesses, so that economic activities may resume in the rural areas. Financial assistance to the sectors at risk is the need of the hour.
The report also suggests that the Government should launch ‘Make in India 2.0’ to benefit from global opportunities, and also give a push to Digital India and Innovation, to attract global investments from countries, such as Japan, Saudi Arabia, the US, the UAE and the UK. A transformation of the banking and financial markets is also suggested to ensure a sustainable economic future for 1.3 billion Indians.