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Opinion | Covid-19 is giving India a rare chance to remake its economy
- Young micro-entrepreneurs are exploring new avenues as demand for e-commerce and online education grows. PPE production is also ramping up as supply lines shift from China
- India must seize the initiative instead of trying to resuscitate the old agriculture-reliant economic model
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Why you can trust SCMP
Recent data released by India’s national statistical office reveals that its GDP contracted by a record 23.9 per cent year on year during the April-June quarter. This is, no doubt, a big blow to the economy, which had been showing signs of a slowdown even before the coronavirus-induced lockdown.
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So what led to this huge drop in gross domestic product? There are a lot of systemic factors at work. First, it means that the key engines of growth – domestic consumption, private investment, government expenditure and exports – are not in the best of health. The spread of the pandemic has brought the economy to a halt after India declared what has been described as the “world’s toughest lockdown” from March 25 to May 31.
Second, the service sector has taken the biggest hit. India was the world’s fastest-growing major economy but that has now changed. In addition, due to the flight of migrant workers back to their hometowns, industrial activity in some parts of the country is yet to resume, even though the national lockdown is over.
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Third, people are unwilling to spend, as many have lost their jobs and salaries have been slashed across the board. According to a joint study by the International Labour Organisation and Asian Development Bank, more than 4 million young Indians have lost their jobs, with the biggest losses in the construction and farming sectors.
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Millions of Indians have been left jobless as Coronavirus pandemic continues to spread
Millions of Indians have been left jobless as Coronavirus pandemic continues to spread
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