When India was hit by the covid-19 pandemic in 2020, the country’s economy suffered a major blow. People’s jobs, income, consumer sentiments and demand, all had been impacted by the pandemic which raised the unemployment rates to soaring heights.
When the country’s economy was on the verge of recovery from last year’s sudden blow, India was again struck with the second wave which was even stronger and deadlier than the first one. Many people lost their lives and the whole country suffered. According to the data, the second wave had an even stronger impact on the economy. The vaccination drive was in full swing and the state wise lockdowns were in place but the country still could not prevent the economy from being affected.
The second wave has had a devastative impact on the economy, affecting all the businesses as well as the rural sector. The GDP growth was less than expected and has failed to rebound faster as compared to other nations like the USA and China. The lower per capita income has further widened the gap between the rich and the poor which is leading to a rise in the poverty rate in the country. Many families are struggling to make their ends meet because of the rise in the unemployment rate in the country, especially in the poorer households. Laborers migrated back to their hometowns which again had an effect on the economy. Small businesses and their employees too have suffered during this wave. According to Think Tank Centre for Moderating Indian Economy, Mumbai, nearly one crore Indians have lost their jobs during the second wave and the numbers are still on the rise. All this has further had an effect on the demand of the population. The expenditure on medical resources has affected the demand for goods in the country which affected the Indian economy. Further adding to the pressure, is the scare of the third wave of the pandemic for which people are already saving as it could be even worse than the second wave. Another set back to the Indian economy is because of the rise in the number of loan defaulters. During the second wave, banks reported an increase in loan defaults and check bounces. It indicates that many people are struggling to pay off their debts.
All these factors have played a role in the current state of the Indian economy which is still struggling to recover from the effect of the pandemic but hopefully will flourish in the second half of the year.