The deadly scourge Covid-19 is officially over killing about seven million people across the world and at least five lakhs in India alone, devastating the world economy.This is the official word from the World Health Organisation (WHO). But the grim facts come from its Director General Tedros Adhanom Ghebreyesus as he says the devastation is far worse than official figures: “Almost 7 million deaths are reported to WHO, but we know that the toll is several times higher – at least 20 million”. A staggering figure.
If this is the official stand of the WHO, it may be that India too had many more casualties than officially reported at 531,369 between January 3, 2020 to May 3, 2023. On May 5, 2022, the WHO said Covid-19 claimed 4.7 million Indian lives. This is almost ten times the official figure.
The pandemic ruined so many families across the world and establishes that during such grim tragedies the world has yet to evolve a method for having actual counts of the affected or dead. The estimates of the economy hit may also be far from the actual. The world economy is stated to have declined by 5.2 percent and overall may have dropped by 13-32 percent due to lockdown.
According to the Reserve Bank of India’s Report on Currency and Finance for the financial year 2022, released on April 29, India’s lost output in 2021 totaled Rs 19.1 lakh crore. This declined to Rs 17.1 lakh crore in 2022. In the current financial year, output loss due to the pandemic is seen further declining to Rs 16.4 lakh crore. A loss of Rs 52.6 lakh crore or 12 percent of the GDP.
The International Monetary Fund (IMF) and the World Bank estimated slower Indian growth during Covid-19. Migrant and daily wage workers were the worst hit during the lockdown. The sudden lockdown threw almost 18 crore migrant workers into disarray. They walked down thousands of kilometers across the country to reach back home, suffering extreme humiliation at the hands of the police and different State agencies. The loss of jobs was gradually sustained by the free foodgrain dole started by the Central government.
Together, the United States, the European Union, Britain and Brazil — all upper-middle-or high-income countries — account for one-eighth of the world’s population, but nearly half of all reported deaths. The U.S. alone has recorded over 745,000 lives lost, more than any other nation. It could face a fiscal crisis in the next few months after the government hit its $31.4 trillion debt ceiling. At the same time, the Bank of Japan compared to the median U.S. mortgage, the current level of federal debt is 230 million times larger. The third largest economy, Japan, is having precarious finances, says Japan’s Finance Minister Shunichi Suziki.
The Asian Development Bank (ADB) projects growth in India’s GDP to moderate to 6.4 percent in fiscal year 2023 ending on 31 March 2024, and rise to 6.7 percent in FY2024, driven by private consumption and private investment on the back of government policies to improve government’s total liabilities rise 2.6 percent to ₹152.61 lakh core. By end-March 2024 liabilities are to touch Rs 169.46 lakh crore. This is on the back of boosting infra projects and fast tracking the economy.It would mean that various burdens on the citizens are likely to increase. The IMF suggested to bring down tax liabilities, but it may not be possible.
Despite this India is projected to be a $10 trillion economy by 2035 at a moderate to high inflation level, says the Centre for Economics and Business Research (CEBR). With more than half the population under 25 years and a national median age of 28, India’s swelling labour force is an asset, as in comparison the workforce in Japan, China and South Korea gets greyer and greyer, says CEBR.
The global FDI dropped 24 percent. But UNCTAD’s Global Investment Report places India as the seventh largest recipient of FDI of $84 billion, including $7.1 billion, in the services sector. However, the Department for Promotion of Industry and Internal Trade data say that FDI inflow fell by 15 percent to $36.75 billion during the April-December of 2022-2023(FY23).Foreign portfolio investors also sold a net of $18 billion during 2022-23.
Covid has also come as a surprise booster for India’s pharmaceutical, private hospitals and medical device manufacturers. India also emerged as a major vaccine producer. It is the world’s 3rd largest drug producer in terms of volume and manufactures 60 percent of vaccines globally, which account for 40 to 70 percent of the WHO’s demand for Pertussis, Bacillus Calmette Guerin, Tetanus, and Diphtheria vaccines. India also contributes 90 percent of the global demand for the vaccine to treat measles. However, it has been facing high competition from China on supplies of active pharmaceutical ingredients (API) at a much lower cost.
A threat to national health security due to high dependency on China led the government to set up a task force to review India’s API sector. NITI Aayog and other representatives from the pharma industry suggested reduction of dependency on China and promote the domestic industry.
Along with this the insurance sector has also made major gains. It has increased medical and all other insurance rates by over 20 to 40 percent. The market share of private sector companies in the general and health insurance market increased from 48.03 percent in 2020 and 49.31 percent 2021. But the sector’s profit also increased phenomenal percent as it also increased the premium rates sharply. The commissions to agents of this is over 60 percent, an improper business model, and the government must intervene.
Elliott Harris, UN Chief Economist and Assistant Secretary-General for Economic Development stated that “The pace and strength of the recovery from the crisis not only hinges on the efficacy of public health measures in slowing the spread of the virus, but also on the ability of countries to protect jobs and incomes, particularly of the most vulnerable members of our societies.” The crisis will likely accelerate shift toward digitalisation, automation. It would further aggravate income equality.
Covid has, like for others, been a mixed bag for India. But it hopes to come out of it faster than the global majors.—INFA