INDIAN ECONOMY IN LOCKDOWN (ANALYTICAL PREDICTION)

Covid-19 has turned out to be the greatest threat in the century, globally. It has caused thousands of deaths and victimized millions around the world. The world is in a lockdown situation and so is India. However, this measure of safety is affecting the country’s economy terribly. To understand it’s impact, let us first divide the economy into its respective WORKING CLASSES:

1. Entrepreneurs: who own several startups, hire the resources and factors including labour in the economy. Entrepreneurs has farther classifications but and over-brief explanation of all the sub-classifications such as gender based ones would not be much in use under this topic, so we consider the following 2 classifications: i. Types of Business: a. Trading Entrepreneurs b. Manufacturing Entrepreneurs c. Agricultural Entrepreneurs. ii. Technology: a. Technical Entrepreneurs-> The industries which need technology and machineries to operate and the IT companies. b. Non-Technical Entrepreneurs-> For example, Restaurants.

2. Labours: Any earning person who is not an entrepreneur or self-employed, and who works for someone else is a labour. Under this context, we classify labour as

i. Employed labour force: The ones who are hired by any entrepreneurs and earns a minimum salary, and

ii. Self-employed labour force: The ones who are independent of an entrepreneur or contract and earn at a wage rate and are paid just for the work they do, for example, coolies, drivers, etc. Shop-owners, for instance, are self-employed and not entrepreneurs because, however, they run a business, it is not an innovative idea brought into the market, rather they are selling the entrepreneur’s production and also they do not actually hire people or make or give contracts. In this age of internet, many youngsters get self-employed through platforms like youtube or some websites.

CHANGE IN DEMAND:

The economy can be primarily divided into two types of commodities: a. Luxury goods, b. Essential goods. Demand for luxury goods has obviously reduced to zero and the companies of such commodities are also totally shut, and as a result, they are suffering incredible losses(this situation is considered to be a loss and not a breakeven, because the company still has to bear it’s fixed costs, like salaries of permenant staff, etc), however, that of the essential goods has reached its highest limits. Even if shops providing daily rations are allowed to stay open, most of the packaging and manufacturing companies are shut, transport facilities (for supplying or delivering) are negligible causing clearing of stock and yet excessive shortage of goods.

EFFECT ON INDIVIDUAL WORKING CLASSES: 1. Entrepreneurs: Types of business: Trading and Manufacturing and are at a zero revenue state and they are bearing unprepared losses. This lockdown is a great threat for the business globally and covering the losses is going to take a considerable period of smooth marketing (buying and selling) which is, for now, far of sight. The date of complete freedom is yet not confirmed and noone knows what awaits after 14th April, 2020 (already there is unofficial news of the extension of the lockdown till 30th April, 2020). Agricultural Entrepreneurs (like farmers) are still allowed to operate and the ones who are in demand. However meeting the raised demand has become a real challenge for them moreover, because of the reduced labour force (since, crowd gatherings are forbidden). Moreover, supply and transport of their products has also become difficult primarily because of the two main reasons: a. The drivers in their road are not getting any rest house or all the shops providing food for them are closed, leaving them with only one option- having food at the destination and not anywhere in the way, this has made the drivers not work. b. It has become a trouble for the police to distinguish between the transporters of goods and the casual people causing the drivers to get beaten up. Therefore, supply graph of the products has dropped at a really high rate and the only supply available are by the off-market sale(sell directly from firm) but most of the population is devoid of proper supply in the phase of lockdown causing shortage of food and a great panic of urgency among the population. Technical : Non-Technical and Technical companies other than IT companies are completely shut down and at a zero revenue situation and the employees do not have the facility to work from home, however, the IT ones are at liberty to work from home and the lockdown hasn’t yet affected this sector much.

2. Labourers: The lockdown is to affect the unemployed labour even more than the employed ones. With the facility of working from home(only certain sectors), the employed labourers(or the permenant staff) will be getting a minimum salary, even of reduced to half, but the selfemployed labour force who work at daily wage rate and constitute 80% of the working population , such as coolies, drivers, are out of income. (Also including the minor working classes such as street vendors, etc.)Self-employed workers on online platform are not much affected, rather, they are in profits because of the raised demand from the bored people quarantined in their homes (this has also put a great pressure on the internet servers and the streaming quality is seemed to have reduced)). However, other self-employed people, such as shop owners, are earning the minimum profits after clearance of their stock and after that they are suffering losses equal to those of the other “offline” self-employed labour classes as their items are out of stock and transport facilities are negligible, as explained above.

The Travel and Tourism industry requires a special mention as this lockdown has affected this industry the most. With complete losses in most of the other sectors, only the online entertainment industry is at high profits, but too less to cover for the country’s losses. As an overall effect, the sensex has suffered massively and the governments of different states have introduced several economic schemes to balance the negative side of the situation. The condition of high panic in the population might cause backfire and crowd gatherings and the government is making full efforts by taking the heavy responsibility of a potential yet helpless population, ensuring their proper health reports and proper food supply without any monetary expectations. Huge funds of the government are being used for the people and the past wastage of money (for example, building detention camps rather than hospitals) might fall heavy on the country’s economy.

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