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As we all know, the Ministry of Home Affairs has issued guidelines for Lockdown 5.0 which has already started from today itself. It is more likely to be called as Unlock 1.0 in spite of Lockdown 5.0. According to the IMF, due to this COVID-19, each and every nation's economy is to be effected except India and China. But according to financial experts, India's growth rate is estimated to come down to zero by the end of this year. On the other hand, The Government is aspiring that everything will be fine, but the country's Reserve bank has estimated that the Growth Rate will be contracted by as high as 5 percent. It may come down to 2 percent.
Central Government has already started to open a few parts of the economy which contributes to 60% of the total economy. It has extended the lockdown till June 30 with a few relaxations like hassle-free inter-state transport, the opening of workplaces, factories. Trade Market was open online during the time of Lockdown but due to less trading and markets remaining closed, it has also been impacted.
For the Financial year 2020-2021, the GDP is estimated to be 0.5%, down by almost 4-6%, which is much much lower than FY19-FY20, i.e. 4.6%.
An Economic Analyst said that the need for the hour is all about higher fiscal spending. Ex-Governor of Reserve Bank of India, Raghuram Rajan also said that higher spending may show a result of a reviving economy. Nobel Prize Winner and Eminent Economist Abhijit Banerjee also expressed that hard cash is to be given in the hands of poor, underprivileged people so that currency spending takes place. If there will be no spending, the market will be affected badly.
The Largest Public Sector Bank, State Bank of India has consecutively decreased interest rates for fixed deposits, as well as savings bank account by 0.4% and 0.2%. Mostly, Pensioners and Servicemen who are fully dependent on Fixed Deposits are affected by this decision of SBI. On contrary to that, Rate of Interests for Loans has decreased but in this market, who is willing to take a loan and start a business?
Several companies have already made employee cuts by showing the reason for less revenue of revenue loss. Other employees of the Private Sector are also worried about their job losses. New recruitments and placements are also paused for this economical revenue downfall. Fresh Graduating Youths are also unsure about their future.
It has come to the knowledge that the government will fund the wider fiscal deficit through a USD 13.3 billion increase in open market operations by the RBI to USD 88.5 billion.
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