Economy

In the era of Corona virus epidemic, while the world economy is crumbling and jobs are facing a crisis, on the other hand, the prices of gold and silver are skyrocketing day by day.

After the pandemic, India's economy has already reached a worse state. The International Monetary Fund (IMAF) has estimated India's growth rate in this year to be 4.5%.

Not only India, the IMAF has estimated this growth rate for the world economy at 4.9%.

Amidst all this, one news that definitely attracts attention is the price of gold.

The price of gold in India at the beginning of June was around 46,600 per 10 grams, which has now crossed Rs 48,000 per 10 grams.

At the same time, in the month of June, the highest recorded increase in gold prices in the world in the last eight years.

The fall in gold prices was recorded on Friday but it was only around 400 rupees. Experts believe that the prices of gold will be seen more quickly.

Employees of Bajaj Auto, one of India's leading motorcycle manufacturers, have asked management to close a plant in Western Maharashtra after 250 employees were found to be infected with the Corona virus and two died.

Union leaders of Maharashtra state say that people are scared to come to work. The factory employs 8,000 people.

At the same time, the company says that the functioning will continue with adequate security measures.

After the lockdown at the end of March, all the industries of India were almost completely stalled and after more than two months now they started functioning.

A few days ago the International Air Transport Association (IATA) announced that by 2037 the number of air passengers would reach 8.2 billion and the aviation industry worldwide is gearing up for this increase in passenger numbers. But like other sectors, this sector was also ruined due to severe injury of corona virus.

The impact of the epidemic was so deep that countries had to close their borders and the aviation industry had to stand their planes in lockdown.

According to the International Air Transport Association (IATA), air travel has decreased by up to 98% and it is estimated that airlines by around the world will lose $ 84 billion by 2020.

IATA has also estimated that revenue per passenger will also fall by 48 per cent in 2020 compared to 2019, and the biggest threat is the aviation industry and 32 million jobs associated with it.

The Indian aviation sector will also face difficulties in the coming years due to the Corona virus. Rating agency CRISIL has estimated that the Indian aviation industry may incur a revenue loss of 24,000 to 25,000 crores.

Crisil Infrastructure's Transport and Logistics Director Jaganarayan Padmanabhan said in a press note, "Airlines are likely to incur a loss of around 17 thousand crores, airport retailers Rs 1,700 to 1,800 crores and airport operators about 5,000 to 5,500 crores.''

Rating agency Moody's has dropped India's rating. Rating means credit rating which can also be called credit in easy language.

What is meant by someone's credibility in the market is exactly the same as the country's rating in the international market. This means that it will be difficult to get loan and the pressure to return will be increased for those who have already taken loan. Moody's is the third major rating agency in the world to have downgraded India. Two other agencies Fitch and Standard and Poor had already dropped this rating.

Moody's rating drop means that bonds issued by the Indian government to raise debt in foreign markets or domestic markets will now be considered less reliable. This rating has reached the lowest level in the last twenty two years. Earlier in 1998, the rating was dropped, and it reached the same level. When the US imposed economic sanctions on India after India's nuclear tests.

The price is so low that Moody's has dropped the rating to Baa3, which can be called the lowest rung of the investment grade. This means that long-term bonds issued by the Government of India will still be considered worth investing, just as the risk is increased.

Even in November last year, there was a fear that Moody's might drop the rating, but then it retained the rating a notch above that at Baa2. However, at that time he changed his perspective on India. That is, he was expecting a problem. He changed his outlook on India to negative from stable.

Then the analysts said that there is not much worry because the economy will pick up and Moody's mood will also improve rather than deteriorate. But now this expectation is proving to be far-fetched. And the matter of concern is that even after dropping the rating, Moody's has kept its outlook negative. This simply means that he is afraid of worsening the situation from here.

It is also important to take a look at the reasons that Moody's has cited for dropping ratings. According to him, the work of implementing economic reforms in the country since 2017 has been very slow. For a long time, the pace of growth in economic growth ie GDP growth is looking weak. The condition of the treasury of the governments is deteriorating, the condition of both the central and state governments. And there is increasing stress or tension in India's financial sector. Stress here means the risk of debt not being returned or imposed or returned.

And the outlook worsening means that the agency is seeing a number of threats linked together in India's economy and financial structure, due to which the Government of India's financial situation may be weakened even more than what the agency is currently anticipating.

And the most dangerous or worrisome thing is that the economic crisis arising out of Corona is not at all the reason for this downgrade of Moody's. He says that this epidemic has only magnified the dangers which were already flourishing in the Indian economy. Seeing these dangers, Moody's changed its outlook last year.

It should be remembered here that two years before that in November 2017, Moody's had raised India's credit rating. At that time, he hoped that some important economic reforms would be implemented in India, which would gradually strengthen the economic condition of the country. But now he complains that since that time the pace of reforms has also been slow and whatever has happened does not show much effect.

Now it is important to understand what is the harm of falling rating and its effect? This is also added when deciding ratings.

The Government of India and the State Governments borrow from many international agencies. Moody's says that even before the Corona crisis, the debt of governments was seventy-two percent of the country's GDP, and now in the changed situation i.e. after the Corona crisis, when governments are needing more money for expenditure, it is estimated that This burden can increase to 84% of GDP.

You should calculate your budget. When you go to take a loan from a bank for a house or a car, the bank officer says that the EMI of all your debts should not exceed forty percent of your earnings in total. If you want to take more loan than this, then you get a private bank or an NBFC who gives you a loan at a higher rate than the market rate. There are also some private financiers who give personal loans to the people of trouble, who charge interest from three to four times and the takers get stuck in bigger trouble than before.

Similarly, when a country issues a bond or wants to borrow directly after a rating falls, it has to pay a higher interest because it is considered a risky task to lend it. As the credit rating of the country falls, the maximum rating of all the companies of the country becomes the same. According to any rating agency, the rating of any private or government company cannot be above the sovereign rating of that country. That is, it becomes difficult and expensive for private companies to raise debt. Those whose bonds or debentures are already in the market, their prices fall and the pressure on them to return the money increases.

Now where India's rating has reached, it is at the bottom of the investment grade. That is, international financial institutions can invest in it right now. But if this rating falls below this, many of the big financial institutions around the world will be forced to immediately withdraw the money of the government of India or the bonds of Indian companies, or at a paltry price. Sell ​​in the market. This is because it is clear to these fund managers that they will not invest in any instrument below the investment grade.

After this some funds are invested, but they are just like money lenders. In this situation, countries get trapped in debt. That is why it is a matter of great concern to drop this rating.

However, there is another aspect of the coin. At this time, if the government started curbing spending in the concern of rating, then it will be very difficult to get the economy back on track. That means a well on one side and a ditch on the other side. But many experts are giving the opinion that the government should leave the worry of ratings for some time and revive the economy with full vigor and once the economy runs, it will not take much time to improve the rating.

Moody's also predicts that India's economy will show a strong boom next year after a fall of nearly four per cent in this financial year. Still, he is afraid that there will be trouble for many years ahead, that is why his outlook is weak. Now if the government does something that the picture is reversed, then this attitude will change automatically.

India's Central Reserve Bank Governor Shaktikanta Das announced on Friday to extend the loan repayment period for another three months, while providing relief to the people repaying the loans.

Reserve Bank Governor Shaktikanta Das said that the global economy has moved towards recession. The Corona epidemic has affected the government's income.

Earlier on 27 March this year, RBI had advised banks to extend the loan moratorium period for 3 months.

Repo rate reduction

Reserve Bank of India Governor Shaktikanta Das has announced 40 basis points in the repo by holding a press conference. The repo rate has been reduced from 4.4% to 4%.

The Reserve Bank has cut the repo rate three times in a row since the lowdown.

The cut in the repo rate affects the loan from banks. This affects the interest rates.

The reverse repo rate has also been cut by 40 basis points and now it has come down to 3.35%.

The International Labor Organization of the United Nations Labor Agency has warned India of suspension of labor law and violation of workers' rights at the time of Kovid-19.

Three provinces of India, Uttar Pradesh, Madhya Pradesh and Gujarat have suspended labor laws. These three provinces are ruled by the ruling BJP at the center of India. Uttar Pradesh has suspended labor laws for three years while in Gujarat also labor laws are being suspended. In the last April itself, the working hours in Gujarat factories have been increased to 12 hours daily.

According to news agency Reuters, so far such news has come out from six states. It is being said that these states are taking these steps to improve the economy. Most of these are those states with ruling BJP governments at the center.

But the International Labor Organization has said that any such step can be taken only after talks between the government, workers and employers. Any change in the labor law without doing so would be a violation of international labor standards.

Congress leader and former finance minister P Chidambaram has said that the details of the economic package that the current finance minister has given, there is nothing for the laborers returning from their poor and starving homes on foot.

He said that apart from the package given for micro, small and domestic industries, the remaining announcements are disappointing.

Former Finance Minister Chidambaram questioned after the Finance Minister of India Nirmala Sitharaman gave details of the economic package of 20 lakh crores of central government, "Finance Minister has given only 3.6 lakh crores out of 20 lakh crores package. , Where did the remaining Rs 16.4 lakh crore? ''

He said that the Central Government is imprisoned in its own ignorance and fear, it will have to spend more, but it is not willing to do so.

Chidambaram said, "The government should borrow more, but it is not willing to do so. The government should allow the states to borrow more and spend more, but it is not ready to do so."

Chidambaram also said that the government's announcement of some support measures for micro, small and medium scale industries (MSMEs) is a good step but it also has a flaw.

He said, "I believe that the measures have been diverted in favor of large MSMEs (about 4.5 million). I think a large group of 6.3 crore MSMEs has been ignored."

Congress spokesperson Randeep Surjewala tweeted, "Yesterday, today and tomorrow, headline package of 20,00,000 crore, only loan package of 3,70,000 crore today, but when" headline to helpline package "? Neither a single penny in the hand of the poor, nor a rupee in the account of the farmer, neither the return or ration of the migrant laborer, nor the shopkeeper / job occupation got anything. ''

Reacting to the economic package, West Bengal Chief Minister Mamata Banerjee said that there is nothing for the states in this.

Mamta Banerjee said, "People hoped that there would be relief ... but they got nothing. There is nothing for the states. The Center is forcing federal rule, misleading people with the economic package."

Rajya Sabha MP of Aam Aadmi Party Sanjay Singh has described this package as a provision of loot to crores.

He tweeted, "One thing is clear from today's package that the unscrupulous people who have already looted millions of crores of rupees in the name of NPAs, the government has made arrangements to loot millions of crores of them again. Poor Nothing felt in his hands, he was left trusting God. ''

Nirmala Sitharaman today announced the first installment of the Rs 20 lakh crore relief package of Prime Minister Narendra Modi's self-reliant India campaign. Daily relief package announcements will be made in the next few days.

In April this year, 2.05 crore people have been unemployed due to Corona virus epidemic, after which the unemployment rate has increased to 14.7 percent.

This unemployment rate is the highest since the Great Depression of 1930.

Until two months ago, the unemployment rate in the country was 3.5 per cent, the lowest in the last fifty years.

However, the US President has said that he was fully anticipating the unemployment rate to rise and he expects the economy to grow in the future.

In a program on Fox News Channel, he said that the loss of jobs in April was not "shocking" and he was "completely apprehensive".

In this program called Fox and Friends, he said that "Even the Democrat leaders are not blaming them for this. But the work I can do is bring these jobs back."

Since the beginning of the Corona epidemic, its impact has been visible on the US economy and the growth rate is seen to be declining over the years.

Shops are closed due to Corona and a record decline in retail sales.

Economist Erica Groshen, who previously headed the government's Bureau of Labor Statistics, describes the current situation as historic. She says, "To combat this epidemic, we have put our economy into a coma. This has resulted in the loss of jobs on a large scale."

Erica Groshen currently teaches at Cornell University.

According to the report of the US Labor Department, all sectors of the economy are declining.

The most affected is the hospitality sector, where about 77 lakh jobs have been lost. At the same time, about 25 lakh jobs in education and health services and about 21 lakh people in the retail sector have been lost.

The Labor Department says that 1.81 crore jobs have been temporarily lost and companies expect the economy to recover again with the situation improving.

However, economists believe that due to this epidemic, there will be a change in the way companies work and the effect can be prolonged.

They believe that the longer the lockdown will last, the greater the damage to the economy.

The Insurance Regulatory and Development Authority of India (IRDAI), the government agency regulating the insurance industry in India, has announced major relief for the insured.

In the time of Corona crisis, IRDAI has granted 30 more days to IRDAI to pay the life insurance premium. This relief is for those policies of life insurance whose renewal date was falling in the months of March and April.

In case of health policy and motor insurance, IRDAI has already announced additional time to pay the premium for third party insurance. After the rebate given to the general insurance companies, companies providing life insurance had demanded 30 more days of deferment from IRDAI.

Thousands of poor people living in the capital of India are standing in queues for the ration received by the government. The factories in which these thousands of poor used to work daily wages have stopped and their source of income has also come to a standstill. In the coming time, how will these poor people feed their family? He is worried about this.

India's Union Finance Minister Nirmala Sitharaman said in a press conference, "Let no one go hungry, the government is trying it".

But the queues in which thousands of poor are standing are too long and the quantity of food is not enough.

Due to the Corona virus infection, at a time when there are millions of people in India and they are taking full advantage of the online delivery system and also getting the things they want from home, at the same time thousands of people are on the streets in India. They face a crisis of livelihood and food.

This is a time of grave crisis. A lockdown has been declared for three weeks in India with 130 crore population. People have been asked to stay in homes and businesses are in complete disarray. A large number of people are working from home and there is a huge decline in productivity.

Last week, Reserve Bank of India Governor Shaktikanta Das announced economic measures to strengthen the economy, saying, "Countries around the world are locking up to fight an invisible killer".

The condition of India's economy was worrying even before the corona virus arrived in India.

The growth rate of the world's fastest growing economy was 4.7 percent last year. This was the lowest level of growth in six years.

In the year 2019, unemployment in India was at the highest level of 45 years and at the end of last year industrial production from eight major sectors of India fell by 5.2%. This was the worst situation in the last 14 years. To put it mildly, India's economic situation was already in bad shape.

Experts believe that because of the impact of the corona virus, where there is a crisis on people's health, on the other hand, the already weak economy may get a bigger blow.

The transition of Kovid-19 has spread at a time when India's economy is trying to recover from the slowness caused by the Modi government's 2016 decision of demonetisation. Through demonetisation, the Modi government was trying to bring black money to the fore, but in an economy like India where small businesses were dependent on cash payments, this decision broke their back. Most businesses were recovering from the effects of demonetisation that the corona virus was killed.

The unorganized sector in India employs about 94% of the country's population and contributes 45% to the economy. The lockdown has badly hit the unorganized sector as thousands of people lost their jobs overnight.

Finance Minister Nirmala Sitharaman announced a relief package of 1.70 lakh crore rupees so that the poor 80 crore people of India can get relief from economic burden and livelihood. By putting money in accounts and arranging food security, the government is trying to help the poor, daily wage laborers, farmers and those who are deprived of basic amenities.

But will India's economy be able to overcome the recession with this little government effort. More efforts are needed to save the economy from the bad effects of this crisis.

The biggest challenge is to implement the relief package announcement at the ground level. At the time of lockdown when additional free ration has been announced, how will poor people reach it? The government should deliver food items directly to the poor with the help of army and machinery of states.

At this time, thousands of people are trapped away from their homes, in such a situation, the government should do the work of putting money in the accounts quickly and also keep the supply of food items on priority.

These are the people whose cash needs to be transferred to their accounts immediately. They have not received any kind of social security. The government should not worry about the fiscal deficit. He should borrow from RBI and spend it on the people in this calamity.

The government has made a separate announcement for the farmers in the relief package. The government will add Rs 2000 per month to farmers' accounts for three months from April. The government used to give Rs 6000 annually to the farmers.

But the help of two thousand rupees is not enough as exports have stagnated, prices will rise in urban areas as demand is increasing and prices will fall in rural areas as farmers will not be able to sell their crops.

This crisis has come at a very critical time, when the new crop is ready and waiting for the market to be sent. In a country like India where millions of people are living in poverty, experts believe that the biggest challenge before India will be how will these food items reach the cities and any country in the world in the event of a difficult lockdown. If the supply is not started then food will be wasted and Indian farmers will have to suffer heavy losses. 58% of India's total population is dependent on agriculture and agriculture contributes $ 256 billion to the country's economy.

Experts are warning that there is a possibility of increasing unemployment in India. There has been a huge decline in production due to the closure of a large number of factories.

To provide relief to people employed or engaged in small businesses, the government can help them by giving interest and tax rebate to help businesses recover.

Unemployment in India is still at a record level and if this situation continues, those working in the unorganized sector will have to face great difficulty. People working in small businesses will either be forced to work for less money or will lose their jobs. There is a discussion in many companies about how many people need to be fired.

Air travel in India is currently banned until 14 April. The shutdown has also had an impact on the aviation industry. According to an estimate by the Center for Asia Pacific Aviation (CAPA), the aviation industry will suffer a loss of nearly four billion dollars. It will also have an impact on the hospitality and tourism sector. Hotel and restaurant chains in India are badly affected and a large number of people are also facing the problem of not getting salary due to the presence of silence for several months.

The auto industry has also suffered heavy losses due to the shutdown and may have to bear an estimated loss of around $ 2 billion.

Experts believe that the relief package that India has announced to revive the economy due to the effects of the corona virus is one percent of the country's total GDP. Compared to Singapore, China and the United States, this relief package is like cumin in the camel's mouth.

Experts say that India should announce a big economic package soon so that the businesses that are drowning in the devastation of Corona can be brought back on track.