1. India’s GDP growth rate has dipped to its lowest in recent times, do you think restricting our global trade due to COVID-19, will it be helpful to our country’s economy , Justify your opinion.
Answers
Answer:
Explanation:
India’s economic growth could take a hit of up to half a percentage point in FY21 because of the disruptions caused by the Covid-19 outbreak, early estimates by the government suggest. But independent economists see a deeper cut of up to one percentage point.
“There will be a hit of 0.3-0.5% on the GDP in the next fiscal year,” said one of the officials aware of the estimate.
“Growth in the first two quarters of the next fiscal could be as low as 4-4.5%,” another official added.
The economy is forecast to grow 5% in current fiscal, the slowest in 11 years. The Economic Survey had forecast 6-6.5% rise in FY21, but Covid-19 has hurt recovery prospects.
Prime Minister Narendra Modi has asked top verticals within the government, including the Niti Aayog, the Economic Advisory Council to the PM and finance ministry to assess the economic impact of the novel coronavirus.
“India is relatively insulated from the global value chain and to that extent impact on India will be less,” Reserve Bank of India governor Shaktikanta Das said on Monday. “But India is integrated into the global economy, so there will be some impact.” Independent experts have called for fiscal and monetary stimuli.
The impact of the COVID-19 pandemic on free trade is yet to be completely understood and whether the epidemic would spell an end to open markets as we know it
Explanation:
- I believe we are now heading towards a "new normal". In the short run much of what we saw in terms of "global trade & finance integration" would suffer. When the world was hit by economic recession in the year 2008, trade fell by nearly 10 per cent in 2009 when global GDP dropped by 3 per cent. That is roughly the trade-growth relationship. Trade grows much quicker than GDP when there's a boom. The "World Trade Organization" ( WTO) has now predicted that total trade can decline as much as 32 percent in the "worst-case" scenario, implying the kind of displacement expected in big economies.
- It's likely to be a really different ball game-the first thing that's going to take place is that nations can begin to develop. In India , for example, we can see the change that is taking place — nearly 50 percent of our trade is linked directly to the sector of micro, small and medium-sized enterprises ( MSMEs), as even big players have sub-contracted the smaller producers. So it's just wondering what the effect will be on trade as a result of the production disruption.
- Most economies would continue to see quite different types of dynamics, apart from maybe China. They would then try to buildup their position in a couple of months & then think about how to compete with other nations. My hope is that after the 1st round of "global integration" that we have seen in the "first decade" of the 19th century this is an entirely new norm that we have not seen.
- That the COVID-19 crisis is an unparalleled problem, and will be a bigger global economy shock than the international economic meltdown, powered only by the shock of demand. This implies a shock to demand & supply and continues to develop. It now becomes apparent that several economies will decline – as will emerging and several Asia-Pacific nations that rely heavily on tourism & trade in goods. The prices of products in the last 10 years have been their lowest.
- For India, nevertheless, due to the low price of oil & commodities we are net importers there is a "slight silver lining", & since the govt does not permit the lower global prices to be fully passed, it implies that there is some financial space by reducing commodity prices. However, work disruption is extremely serious, in particular in MSME, which are the backbone of production , trade and services. This is a huge shock to the global economy that will change several things once we get out of it.