Chief Economic Advisor (CEA) K Subramanian has said that COVID-19 outbreak will hit the Indian economy and the impact can only be assessed after the pandemic is over.
This is in sharp contrast to the statement made by Union Minister Anurag Thakur who pointed out that the latest data on trade and indicators of domestic output do not suggest any adverse impact of coronavirus on the Indian economy.
“As is true for the world at large, India’s near-term macroeconomic outlook also vulnerable to disruption of trade with China and 2nd-round effects arising from an expected slowdown in global growth. However, the latest available data on trade and indicators of domestic output don’t suggest any adverse impact on the economy,” stated MoS Finance Thakur in a written reply in Rajya Sabha.
“Additionally, a positive impact on India’s economy may arise from a decline in global oil prices triggered by the outbreak of COVID19,” he added.
“Share markets in several countries including the USA, Brazil, Argentina, and Japan have crashed. There is uncertainty across the world due to coronavirus. Whenever there is uncertainty, an atmosphere of fear comes in share markets, which will result in ups and downs,” Subramanian told ANI.
“We have to monitor the situation. According to my estimation, it should go down till April. The first case of coronavirus was reported on January 22. In other countries, COVID-19 cases increased exponentially,” he said.
The Chief Economic Advisor added: “There is no doubt it will have an impact on the economy. People have stopped going to restaurants and malls. The impact can be assessed after this is over. There will be uncertainty in stock markets so long as there is uncertainty due to coronavirus.”
Subramanian said that global investors should learn from this and diversify their investments. “They should not put all investments in one place,” he said.
Commenting on oil prices which have gone down recently, he said: “Prices of crude oil have gone down in dollars. But the value of rupees has weakened against dollars. Some benefits are passed on to customers and some benefit goes to the government to manage its fiscal.”