All estimations on Corona Virus went wrong. India is competing with the top 10 advanced countries which are more advanced in achieving the high number of Covid cases despite the united fight being put up against the global pandemic. India as on date has crossed 8,23,736 cases. However, the active cases remained at 2,85,640 with the recovery rate reaching as high as 5,17,546. The only consolation for India is the lowest death rate with 22,171 as on date.
Despite all efforts of both Central and state governments, the number of positive cases continued to rise due to its policy of Testing, Tracing and Treating (TTT) being adopted in fighting the pandemic as this only option left for a country like India with its high population density. This also attracts massive financial implications as predicted by experts and declared by none other than Governor of Reserve Bank of India (RBI) Shakti Kant Das.
With Corona almost assuming community proportions (whether anyone accepts or not) in the country despite governments best efforts for prevention, the expenditure is also equally on the rise. Today, the country is facing a serious financial crisis which it never faced before. Though the Central Government is spending Rs 4 lakhs rupees on each death, the contribution of State Governments is Zero. It is assumed that totally Rs.50,000 crore spent so far. Probably another Rs.1,00,000 crore expenditure may be expected to incur.
Health Services being Concurrent item, both central and state governments have to spend equally. Some state governments like Delhi, Maharastra, Tamilnadu Kerala and Andhra Pradesh have done more than Rs 10 lakh Covid tests and trying to control the decease to a maximum extent. For conducting Rs 10 lakh tests they had to spend each Rs.2000 crore plus. As early detection reduces the mortality and spreading and also cost as well.
In addition, the government had to bring back more than 4 lakh highly placed people in advanced countries like US, UK, Australia, to India as they got registered for Vande Bharath mission. With the return of these professionals, the foreign remittance in Dollars would come down drastically. Rupee becomes weak, US dollar = Rs.100 by next year. Same is the case with 5 lakh workers returning home from Gulf countries. Placing them back on employment locally here is a tough task for the state governments like Kerala, AP, Telangana and Odisha. Hence, nearly Rs.1 lakh to Rs 2 lakh crore remittance will come down. The purchasing power of these families will also equally come down. It has to be seen how the country would cope with as it has the only option left is to restrict its imports.
The country has also lost a massive revenue of Rs 15,000 crore every month with the collections from GST, Airlines, shopping malls, cinema halls, function halls, hotels, Resorts, and Sports events like IPL etc. Last month’s (June) GST collection was Rs 90,000 crore due to the fact that people purchased heavily, which was not permitted for 70 days due to lockdown. However, this month’s GST collections are expected maybe around Rs.80,000 crore compared to Rs.1,13,000 crore in January 2020. Guess, how much the country is losing the revenue due to lockdown.
Another scenario is, People are selling gold heavily for survival. HDFC bank has exclusively kept 800 branches for Gold loans with a target of Rs.10,000 crore business. Last year gold loans outstanding as on March 31, 2020, was Rs.6,200 crore. They are competing with Muthoot Finance. This indicates a sad financial position of the poor and the middle-class section. I also foresee that there will be huge starvation deaths in the country due to lack of food and medicine.
Adding fuel to fire, China and Pakistan-combi are set to destabilise the country taking advantage of the pandemic. The unrest at the borders has made the country to spend a huge sum of Rs. 1 lakh crore on procuring the armoury like jet fighters, Apache helicopters etc besides training the 50,000 army persons who have retired during the last two years.
New investments may not come in for the next two years owing to the recovery situation which is set back for the country as it is an unforeseen loss.
The central government estimated revenues of Rs.20 lakh crore for this year may come down to Rs.15 lakh crore or less, which is equivalent to the 2014 economic situation when the Modi Government took over reins for the first time.