The uncertainties around employment and financial apprehension have minimized the spending tendency amongst Indian consumers on discretionary goods. India will bounce back into its normal condition gradually by easing the restrictions, however some uncertainties still exist in the economy.
COVID-19 has made an imbalance in the Indian economy that it has affected various sectors in country and its output, production and potential. The COVID-19 restrictions in country as impacted many industries and individuals very badly that it shook up their economic balance completely.
The wide spread and day by day increase in cases of the disease is certainly a big challenge that the county is facing now. In one of the recent consumer surveys done by Deloitte, they reported that the consumers are not showing much interest to invest or buy discretionary goods due financial inconsistencies and crisis.
Another impact arising is the low capital availability in business to continue the projects. Thus, low demand for investments in various sectors.
The report says that five factors will be key in determining the pace and time of the recovery. The availability of treatment and vaccines will be the most important factor, and the sooner people have access to either of these, the quicker will be the economic revival.
The spread of the virus and its longevity are slowly leading to another contagion of caution and fear (the second factor). Caution amongst consumers may change their consumption behaviours and demand patterns, while reshoring.
The third factor will be the intensity of the secondary impact of supply-chain disruptions spilling across industries and the financial sector.
During the primary stages a few industries, such as hospitality and manufacturing, felt the immediate impact of the virus and the movement restrictions that followed. Possibilities of several outbreaks and prolonged pandemic may impact productivity, and capacity building across all industries, all of which may also lead to slower credit growth.
The strength of domestic consumer demand, the first pillar to growth, are the fourth factor. While rural demand may impediment for a few times due to better rainfall and also the government’s support to produce employment opportunities in rural areas.
The extent and effectiveness of the fiscal and monetary stimulus by the govt will determine the human cost and economic disruption, as India strides towards a replacement normal on the opposite of the pandemic.
The variations around these five factors will
likely determine India’s economic process for the
subsequent few years. this might range from a moderate economic
impact with gradual recovery to severe economic damage with sluggish recovery.
Under the foremost likely scenario, recovery is probably
going to achieve momentum from the beginning of FY2022
after negative growth in FY2021.
However, the hospitality
and industry may still see difficult times ahead.
Industries must prepare themselves for uncertain times while hoping
for the most effective.
