Indian economy is also expected to slow down between 2.5 % to 4 % GDP growth according to estimates by various rating agencies and regional development banks.
- Ravi Singh
The new pandemic COVID-19 will have a huge impact on the global economy. Lockdowns across the world have disrupted the production and supply chains of the countries affecting the economic activities. Indian economy is also expected to slow down between 2.5 % to 4 % GDP growth according to estimates by various rating agencies and regional development banks. The lockdown is expected to be a major dampener to the demand impacting across the entire spectrum of industries such as automobiles, Capital Goods, construction, cement, IT, Gems & Jewellery, Airlines, hospitality, SME, real estate, etc.
In view of the lockdowns and trade disruptions, Agriculture and Farming sectors are also getting hit by varied reasons. Even though the sector has exemption orders from the lockdown it isn’t showing up any positive effect on the ground level. At the current phase of lockdown, crops cannot be harvested as there are restrictions on the free movement on the labor. Harvested crops cannot be transported to the markets as there are restrictions on transportation. Even if the crops are taken to the markets, the excess cost occurred due to the above factors mentioned isn’t making the selling profitable. Apart from these, additional costs for harvesting due to labor and transportation, the demand slump from the urban side due to the lockdown of commercial activities and free movement of the consuming population(tourism restrictions, restaurants closures, and café and school meals suspension) has slashed down the prices where the selling prices are not even covering for labor costs.
However, comparatively, the disruption to the consuming population is currently minimal. However, If the above bottlenecks aren’t resolved with timely action from the governments but we may see highly inflated prices for the Agri products in the urban and semi-urban areas in the next two quarters. Shortage of seeds, fertilizers, veterinary medicines, and other input could affect agricultural production massively and it could take more time to recover due to leniency to the current field problems by the governments.
- Ravi Singh is VP- Head of Research, Karvy Stock Broking. Views expressed are the author’s own.