Despite restrictive government measures, India is one of the countries most affected by COVID-19, and has yet to reach the peak of its incidence. The pandemic has sparked the worst economic crisis in history, worsening India's investment attractiveness and reducing the resources needed to play a greater international role. It also weakens the image benefits resulting from a quick and decisive response in the initial phase of the pandemic. Economic problems and the fight against the pandemic will encourage the authorities to deepen cooperation with the EU in the field of health, economic and safety protection.
Pandemic in India
Until July 19 this year. India has more than 1.1 million cases of SARS-CoV-2 infection and over 27,000 deaths. This makes India the third largest country in the world in terms of the number of infections (behind the US and Brazil) and the eighth largest death toll. The number of new infections has been growing dynamically in recent weeks, and on July 19 it exceeded 40 thousand. daily. Although these rates are still relatively low in relation to the entire population (810 patients per million inhabitants compared to the world average of 1877 per million; 20 victims per million in India compared to the global average of 78 per million), it is likely that a significant proportion of patients have not been diagnosed. The increase in the number of those infected is also related to the increase in the number of tests carried out (from several thousand a day in March to 180,000 in July) and comes at a time when the long period of national quarantine ends and the government may have more limited possibilities to extend radical measures.
In the face of the pandemic, the Indian authorities introduced some of the strictest restrictions in social and economic life relatively early. From the beginning of March, entry for foreigners was suspended, and the state authorities introduced rules of social distancing. On March 24, the government announced a complete shutdown of the country for 21 days, including by ordering to stay at home, stopping transport and economic activity. This decision was extended five times, with the subsequent stages containing fewer and fewer restrictions. Since June, the economy has been gradually thawing. However, in view of the increase in the incidence in some regions of the country, individual states (eg Maharashtra by the end of July) and cities (eg Chenai) decide to restore total quarantine. According to government estimates, by June preventive measures could have saved 37-78 thousand from death. people, however, were a huge cost to the economy and society.
With the introduction of the total blockade, the government allocated USD 24 billion to direct aid to those affected by the restrictions (including food, shelter). On May 12, a major stimulus package of $ 268 billion was announced, representing 10% of the country's GDP. It includes fiscal instruments and direct support (including food, remittances, loans) for the poorest people, small and medium-sized enterprises and state authorities. However, the abrupt closure of the country left hundreds of millions of workers without a source of income, and tens of millions of seasonal migrants stranded in cities with no way to return to their places of residence.
Long-term restrictions deepened the slowdown in GDP growth already observed in recent years (up to 5% in 2019). While in mid-April the IMF predicted that the Indian economy would slow down to 1.2% of GDP in 2020, remaining one of the few that will not fall into recession, analyzes from June already predicted a GDP decline of 4.5%. According to Goldman Sachs, in the second quarter of this year. GDP was to drop by a record 45%. All branches of the economy experienced huge losses: industrial production, services and agriculture. According to estimates, unemployment in April reached 30% (from 5.5% in 2019), and the consumer optimism indicator fell to a historically low level of 63 points. Major rating agencies have downgraded India to the lowest level of investment, also pointing to deepening public debt and tensions in the financial system.
The Self-Sufficient India (Aatmanibhar Bharat) campaign announced on May 12 also sparked great concern among foreign partners. Its aim was to strengthen long-term resilience to future global crises. The statements of Prime Minister Narendra Modi could suggest a return to the Cold War policy of import substitution and building economic autarchy. India is to reduce the trade deficit and become more independent, especially in sectors such as defense and advanced technologies. At the slogan level, it is an Indian proposal of globalization, which puts people in the center, not business, takes into account local conditions and environmental protection.