Topic : The effects on the sudden lockdown due to the pandemic ( corona ) on the economg of India. Hint : point 1 on production.
Answers
Answer:
does not require an economist to tell that a complete social and economic lockdown of India for 21 days would severely impact the supply side of the economy, that is, production and distribution of goods and services, except for the essential items that are exempt.
In an economy already reeling under a demand depression, rising unemployment, and lowering of industrial output and profits, all of which happening together for several quarters now, a supply-side constraint would deliver a big blow, jeopardising growth prospects and social and economic wellbeing of a large number of people.
The quarterly GDP growth has consistently fallen since Q4 of FY18. If there is a deviation in Q4 of FY19, as shown in the graph below, it is because the National Statistical Office (NSO) revised its data on February 28, 2020, drastically cutting down growth rates in the first three quarters of FY19 (from 8% to 7.1% for Q1; from 7% to 6.2% in Q2 and 6.6% to 5.6% in Q3).
What could be the magnitude of the impact of a complete social and economic shutdown may not be easy to estimate, but it is likely to be far more severe than either the 2016 demonetisation or the 2017 GST rollout.
Nobody now disputes that those two events delivered economic shocks from which the economy had not yet recovered when the coronavirus pandemic struck.