Economic
Highlights
New Delhi, 8 May 2023
Covid-19 Kills 20 Mn
INDIA LOSES Rs 53 Tr, 12% GDP
By Shivaji Sarkar
The deadly scourge Covid-19 is officially over killing
about seven million people across the world and at least five lakhs in India
alone, devastating the world economy.This is the official word from the World
Health Organisation (WHO). But the grim facts come from its Director General
Tedros Adhanom Ghebreyesus as he says the devastation is far worse than
official figures: “Almost 7 million deaths are reported to WHO, but we know
that the toll is several times higher – at least 20 million”. A staggering
figure.
If this is the official stand of the WHO, it may be
that India too had many more casualties than officially reported at 531,369
between January 3, 2020 to May 3, 2023. On May 5, 2022, the WHO said Covid-19
claimed 4.7 million Indian lives. This is almost ten times the official figure.
The pandemic ruined so many families across the world
and establishes that during such grim tragedies the world has yet to evolve a
method for having actual counts of the affected or dead. The estimates of the
economy hit may also be far from the actual. The world economy is stated to
have declined by 5.2 percent and overall may have dropped by 13-32 percent due
to lockdown.
According to the Reserve Bank of India’s Report on
Currency and Finance for the financial year 2022, released on April 29, India’s
lost output in 2021 totaled Rs 19.1 lakh crore. This declined to Rs 17.1 lakh
crore in 2022. In the current financial year, output loss due to the pandemic
is seen further declining to Rs 16.4 lakh crore. A loss of Rs 52.6 lakh
crore or 12 percent of the GDP.
The International Monetary Fund (IMF) and the World
Bank estimated slower Indian growth during Covid-19. Migrant and daily wage
workers were the worst hit during the lockdown. The sudden lockdown threw
almost 18 crore migrant workers into disarray. They walked down thousands of kilometers
across the country to reach back home, suffering extreme humiliation at the
hands of the police and different State agencies. The loss of jobs was
gradually sustained by the free foodgrain dole started by the Central
government.
Together, the United States, the European Union,
Britain and Brazil -- all upper-middle-or high-income countries -- account for
one-eighth of the world’s population, but nearly half of all reported deaths.
The U.S. alone has recorded over 745,000 lives lost, more than any other
nation. It could face a fiscal crisis in the next few months after the
government hit its $31.4 trillion debt ceiling. At the same time, the
Bank of Japan compared to the median U.S. mortgage, the current level of
federal debt is 230 million times larger. The third largest economy, Japan, is
having precarious finances, says Japan’s Finance Minister Shunichi Suziki.
The Asian Development Bank (ADB) projects growth
in India’s GDP to moderate to 6.4 percent in fiscal year 2023 ending on 31
March 2024, and rise to 6.7 percent in FY2024, driven by private consumption
and private investment on the back of government policies to
improve government’s total liabilities rise 2.6 percent to ₹152.61
lakh core. By end-March 2024 liabilities are to touch Rs 169.46 lakh crore.
This is on the back of boosting infra projects and fast tracking the economy.It
would mean that various burdens on the citizens are likely to increase. The IMF
suggested to bring down tax liabilities, but it may not be possible.
Despite this India is projected to be a $10 trillion
economy by 2035 at a moderate to high inflation level, says the Centre for
Economics and Business Research (CEBR). With more than half the
population under 25 years and a national median age of 28, India’s
swelling labour force is an asset, as in comparison the workforce in Japan,
China and South Korea gets greyer and greyer, says CEBR.
The global FDI dropped 24 percent. But UNCTAD’s Global
Investment Report places India as the seventh largest recipient of FDI of $84
billion, including $7.1 billion, in the services sector. However, the
Department for Promotion of Industry and Internal Trade data say that FDI
inflow fell by 15 percent to $36.75 billion during the April-December
of 2022-2023(FY23).Foreign portfolio investors also sold a net of $18 billion
during 2022-23.
Covid has also come as a surprise booster for India’s
pharmaceutical, private hospitals and medical device manufacturers. India also
emerged as a major vaccine producer. It is the world’s 3rd largest drug
producer in terms of volume and manufactures 60 percent of vaccines globally,
which account for 40 to 70 percent of the WHO’s demand for Pertussis, Bacillus
Calmette Guerin, Tetanus, and Diphtheria vaccines. India also contributes 90
percent of the global demand for the vaccine to treat measles. However, it has
been facing high competition from China on supplies of active pharmaceutical
ingredients (API) at a much lower cost.
A threat to national health security due to high dependency
on China led the government to set up a task force to review India’s API
sector. NITI Aayog and other representatives from the pharma industry suggested
reduction of dependency on China and promote the domestic industry.
Along with this the insurance sector has also made
major gains. It has increased medical and all other insurance rates by over 20
to 40 percent. The market share of private sector companies in the general
and health insurance market increased from 48.03 percent in 2020 and
49.31 percent 2021. But the sector’s profit also increased phenomenal percent
as it also increased the premium rates sharply. The commissions to agents of
this is over 60 percent, an improper business model, and the government must
intervene.
Elliott Harris, UN Chief Economist and Assistant
Secretary-General for Economic Development stated that “The pace and strength
of the recovery from the crisis not only hinges on the efficacy of public
health measures in slowing the spread of the virus, but also on the ability of
countries to protect jobs and incomes, particularly of the most vulnerable
members of our societies.” The crisis will likely accelerate shift toward
digitalisation, automation. It would further aggravate income equality.
Covid has, like for others, been a mixed bag for India.
But it hopes to come out of it faster than the global majors.---INFA
(Copyright, India News & Feature Alliance)
|