Agriculture holds the key, pandemic an opportunity for India: Economists at World Economic Forum
Chief Economists at the World Economic Forum on Thursday talked about the global economic outlook in the time of coronavirus pandemic. The COVID-19 pandemic is predicted to result in the largest contraction in global per capita income since 1870.
Chief Economists at the World Economic Forum on Thursday talked about the global economic outlook in the time of coronavirus pandemic. The COVID-19 pandemic is predicted to result in the largest contraction in global per capita income since 1870. Despite this dire forecast, there is now a unique opportunity to shape an inclusive and sustainable economy.
Due to coronavirus pandemic, India's growth in the fourth quarter of the fiscal year 2020 went down to 3.1%, according to the data revealed by the Ministry of Statistics.
While talking about the impact of coronavirus pandemic on India's economy, the economists at WEF maintained that the service sector, as well as the agriculture sector, has helped the world's largest democratic country to keep its economy sustained even during this pandemic.
While talking about how India is dealing, Beata Javorcik, Chief Economist, European Bank for Reconstruction and Development (EBRD) told indiatvnews.com: "What India has going for it is its strong service sector. During the pandemic, many firms have been relying on their IT Systems. They have realized perhaps deficiency in their IT systems."
"I think there is a need for additional investment in IT services and software. What surprises me most is that at the beginning of the pandemic we talked a lot about the concentration of production in China which was viewed by many commentators as a source of vulnerability. Yet nobody talked about high concentration of back-office services at IT offices in India. This is a testament that how well does India deal with a pandemic. However, exports of services have been affected. The crisis has created an opportunity for India to export more services," Beata added.
However, Ludovic Subran, Chief Economist, Allianz said that the current situation of India indicates a very slow recovery from the pandemic as its having issues in dealing with it.
While talking about how worse this pandemic can get, Subran said: "Unfortunately India has an issue with getting the pandemic economic impact under control. The high-frequency indicators are not marching in the right direction be it on electricity consumption, workplace mobility all these indicators are casting a very slow recovery for India. We have a forecast of -3.1 for the fiscal year 2020-21, however, rebound by 7 percent. But India will not go back to the pre-crisis period before 2022.
The issue for India is the epidemic down-side risks and also because of the deficits. The question is how to avoid the depreciation of Rupees. That's a big issue. The [Reserve] Bank of India is trying to do whatever it takes to stimulate the economy but it has to do more."
"I think this is going to be a difficult 18 months for India just like Brazil, Israel, South Africa, and other borderline-emerging advanced economies," he added.
Paul Donovan, Chief Economist, UBS told indiatvnews.com that even though the agricultural sector has been fruitful for India it has its own structural concerns.
He said: "Agriculture remains an important part of India's economy. Its the largest sector and it is going to continue to see the reasonable level of demand. On one hand, the agricultural side provides a certain foundation to the Indian economy even though it has some structural concerns. What concerns me is that the over the post-pandemic development in India, the policymakers consistently refer to the fact-- 'we are going to be the next China'. Well nobody is going to be the next China because that model is not working anymore. We are moving into a different way of doing business. I am not sure whether that realisation has become firmly entrenched in India that they need to start thinking about how to adapt the structures of the economy, the priorities of the economy over the medium term of the world with more localisation. That's what worries me that whether India has fully embraced that structural break anyway."
The forum comprised of eminent speakers like Paul Donovan, (Chief Economist, UBS), Beata Javorcik, (Chief Economist, European Bank for Reconstruction and Development), Jianguang Shen, (Chief Economist, JD.com), Ludovic Subran, (Chief Economist, Allianz) and Saadia Zahidi, (Managing Director, World Economic Forum).
WATCH | Impact of Coronavirus Pandemic on India's Economy