Bikky Khosla | 25 Feb, 2020
the US and China nearing an agreement after a year-and-a-half-long
trade war, there was a glimmer of hope for recovery in global growth
early this year. But now the world is worrying anew due to the deadly
Corona virus -- originating in China and now spreading beyond its
borders. Stocks in India and around the world tumbled on Monday,
and though the outbreak does not pose an imminent threat to the Indian
economy, the situation demands careful monitoring on part of our
the second biggest economy of the world, forms a major block of the
economic chain in which the global markets operate, and therefore
China's economic ailment is bound to impact the global slowdown.
According to some estimates, the SARS outbreak in China in 2002-03
impacted the country's GDP growth rate by 1.1 to 2.6 percentage point,
and now in 2020 -- when the global economy is more interconnected -- the
Corona virus outbreak can have worse impact.
grim global economic outlook is not good news for India, and most
importantly it came at a difficult time for our economy. India's
reliance on China is spread across sectors, such as pharma, chemical, auto component, solar, steel, telecom, white goods,
electronic components, consumer durables, footwear, apparel, etc. This
dependence is expected to have a significant impact on our economy. At
the same time, exports to China, now at USD 15bn, could also get hit,
especially in the area like petrochemicals.
Last week, Finance Minister Nirmala Sitharaman -- while allaying any immediate worries about scarcity of any raw materials due to the Corona virus
epidemic-- declared that she would discuss with the PMO about the relief
that could be offered to industry. It is a welcome move, and we hope
the government will leave no stone unturned to ensure that the Indian
economy, which is just about showing some nascent signs of recovery, can
overcome this tough phase.
I invite your opinions.