Pandemic economies are different from normal economies. The coronavirus pandemic like any other fatal ones as before has caused enough damage to our economy. It has affected almost 185 countries. It has posed severe challenges to the international market networks as well as mobility of domestic resources. It has also created a huge delimma between addressing the virus and handling the economy to the government. The shutdown of large part of economy such as industries, sports league, work places and cultural sites has had an impact on the financial status of the country. This pandemic has managed to potentially trigger the economies of all types.
Fighting COVID-19's economic effects will take more than interest rate cuts while having over 8000 Indians affected by it. Though this is the most spontaneous response that could be taken by the central bank, this decision might not provide expected results given that interest rates have already hit rock bottom level. Only monetary policy cannot repair the supply chain. Liquidity injection by the banks can restructure the global traffic undoubtedly only when there are issues with the flow of finance. But the current major problem is the abrupt stoppage of production. It has created both demand and supply problems.
The retail industry is completely shut down except pharmaceuticals and groceries. The industries have an tough phase to go through, they need to substantially discuss the consequences of the steps they take. More importance should be given to the essential items to suffice the basic needs to people to maintain the money supply as well as to procure a healthy workforce. The most important resource, the people are either unwell or quarantined which has reduced the demand. Reduction of demand will lead to inflation and eventually to stagflation (falling GDP).The real need are strong fiscal measures and tax reforms to prevent companies and banks from becoming bankrupt and compensating underemployment.
A vigorous risk management process should be made to diversify supply chain. The industries should start prioritising. Small businesses and FMCGs' are affected the most, infact they are the ones that produces and supplies the day to day requirements of common people. They do not have enough cash inflow and have huge number of creditors lining up on them. Government, by providing the manufacturers with adequate funds and extending their credit repayment period can help timely supply of essential goods to retailers for sale and to keep a track of money flow in the economy as well. Since all these businesses are at the mercy of the government huge industries such as automotive, aerospace and luxurious goods industries will still be affected, but it's equally important to understand at present short term achievement matters more than long term accomplishments. According to the recent study of FIEO (Federation of Indian Export Organisation), there will be as many as 1.5crore job losses. The airlines and ocean shipping which are the primary catalysts for exports can speed up themselves in exporting of spices (something India is known for), fabrics, medical drugs to compensate underemployment in workforce.
The faster the plans are executed the greater responses the economy derives. The available resources should be deployed in collaborative and active planning. E-commerce is not the only survivor of retail chain since they carry huge overhead costs. So only those industries that have diversified business and plan on having an integrated supply chain can survive the post pandemic phase. Besides this having more empathy towards social and civic interaction post pandemic helps build on international relations.
The recovery of our economy completely depends upon the degree of response to the pandemic.
Since India adopted the process of intensive screening and earlier lockdown we are lesser affected by this virus. Following the government's protocol, taking preventive measures and staying indoors can help the virus vanish faster and eventually boost our economy . This is not yet the end of an interconnected world, the pandemic itself is proof of the countries interdependence.