The Math behind the madness. What the GDP fall means for all of us.
Yesterday, we witnessed what was history. Again. But since this year has not been the bearer of great news, I think somewhere within us all, we weren’t all too surprised.
India’s economy witnessed its steepest contraction on record in the April-June quarter of the current fiscal year. A -23.9% steep fall. This did not come as a shock as it was something we all expected post the strict lockdowns imposed in the wake of the spread of the deadly coronavirus infection. This not just stalled our social lives and mobility, but also maimed the economy. Income losses, job cuts, companies shutting down overnight, it all happened with the GDP fall being the last nail in the coffin.
But, why is everyone talking about it?
It is hard to ignore Asia’s third-largest economy when it has suffered a contraction for the first time since India began maintaining quarterly records in 1996.
Data released by the National Statistics Office yesterday showed that India had seen a -23.9% slump in the April-June quarter as against the 3.1% growth in the January-March quarter. To put this in perspective, this has been the worst as compared to all other major economies, including China ( at 3.2% growth in April-June and the UK with a 20.4% slump in the second quarter).
Amongst the worst hit are the hospitality, travel, manufacturing, transport and construction industries.
Under the COVID cloud
This data could be the onset of a recession. “Though the coronavirus-related restrictions have been gradually lifted, there has been an impact on the economic activities as well as on the data collection mechanisms,” the government's statistics office said.
Chief Economic Adviser Krishnamurthy Subramanian said, "India was in lockdown all through April to June quarter with the majority of economic activities being restricted. So this trend is along expected lines.”
According to a recent survey by the International Labour Organisation, close to 40% women have lost their jobs to the pandemic.
What can you do to beat this?
We cannot stress enough that being women we are most susceptible to the impact the economy is going to have. But this could also be good news. This could be an opportunity for you to get your finances in order and keep a check on your expenses.
If you have lost your job, and are finding it difficult to find another, use this time to get everything else in order - your house, your budget, your expenses and income.
Predict Your Future: If your job is in the sectors that you know might take time to pick up, this is a good time to develop a skill that’s in-demand but will add value to your existing skillset. Build an Emergency Fund: We cannot stress this more. If the economy is going to worsen, it is important that you start saving up. Start bucketing your expenses and allocating stiff savings towards those. Keep 6 months worth of fixed expenses somewhere easily accessible, like your savings account.
Clear Debt: If there are predicted job losses and large pay cuts, the last thing you want is a loan of an albatross over your neck. With the moratorium coming to an end as well, it is important that you clear all debt as soon as possible, and not take any more debt till things normalise.
But what’s most important!
Don’t Panic! Sure, this is an undesirable situation, but hey, life is full of surprises and sometimes they’re not all that great. What’s important is that we have gone through tough times, and we will get through this too. While this might not seem like a turnaround soon, according to experts, India will slowly, but surely recover.
Basis is a first-of-its-kind platform, aimed at enabling women to achieve financial independence through expert advice, in-app knowledge Boosters and supportive communities.
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