CASH FLU

As the virus spreads, economic growth stutters. But there’s a silver lining...

- Jyotika Sood and Pranay Sharma

PRAGYA Automobiles’ owner Ankit Mishra is in a quandary. At his factory in Delhi’s Okhla region, he can either buy raw materials at double the prices, close down until supplies are normal, or maintain a break-even level, that is, neither earn profits nor incur losses. At present, he has decided to stick to the third option. Several Indian businesses in sectors such as auto, pharmaceuticals, and electronics, which are already under pressure due to the current slowdown, are likely to be squeezed further.

In China, close to 100 million workers—a third of the migrant workers employed at manufacturing hubs across the country—are still under quarantine, which is impacting production and economic growth. Other important manufacturing nations, such as the US, Italy, South Korea, and Japan, face a similar situation. Their economic growth is likely to be lower than what was estimated earlier. Globally, stock markets are in a tizzy; several tanked in the past few weeks. The Indian Sensex was down 7.5 per cent from its high in February 2020.

These are the consequences of the dramatic and dangerous spread of coronavirus across the world. The highly contagious virus began its journey in China, crippled several provinces in the country for weeks and then spread to more than 78 countries in a short period. As it proliferated, its impact stretched from the human costs—deaths and isolation—to political and economic ones. No economy is safe anymore—every country will have to deal with the after-effects over the next few months.