Why 23.00% drop in the economy isn't that bad and what does it mean?

2 min 3 Sec read

The monstrous 23% dip in the Indian economy in the 1st quarter(April-June) is the biggest drop for any major economy of the world. Even countries like the UK, US haven't reported this amount of catastrophic damage to their economy, even after they being hit by COVID hardest (in terms of % death). So, are we doomed?

GDP or Gross domestic "product" is the total value of goods produced or services provided by a country. Now, what makes "a country"? is it a physical concept or a psychological one? I believe in the latter. It's in our minds. Some bunch of people mutually "agreed" to stay together and called their organization as a country.

Before going deep into this seemingly ravaging economic catastrophe, we should also take into account the factors affecting the "production". When we work, we produce something. Be it service or any tangible product, we have to work to generate some services so that we can barter that with something else of our demand directly or indirectly, such as cash( for example our salary or we might want to buy food for our services indirectly).

INDIA was the first among the major economy to impose a complete lockdown (as the virus started spreading from WoooHAN). We were not into our work as compared to earlier's capacity.

And if you don't work, you can't produce anything! My father works in the core sector and due to lockdown, his company requested him to stay home for 1 month, following government orders. So no production there. But, since he is in the formal sector, he was lucky enough that only salary got reduced. The railway was halted and I had never seen such type of stand stillness for my entire life.

But it's also true that many lost their jobs during this pandemic. The economy is an interconnected web. 

When you do not produce, you will not have anything to exchange for and this, in turn, will create a chain reaction and eventually, the informal sector which doesn't sit on cash or kind surplus sees a drastic decline in demand and hence they are the one who is hit the most.

Now when you don't work for a period of 1 month in a quarter, a drop in production is inevitable, and hence decline is GDP. And I believe it's completely normal in this time of absurd abnormality.

Things are slowly getting back on track. I'm seeing street vendors gradually coming out from their hibernation and demand is slowly catching up. Which means somewhere down the line, production is also improving. These GDP numbers are our past and we must not freak out. Had we worked, produced, or provided something, and still if there had been a decline in GDP numbers, then we could worry about it as then, it would be a waste of our energy and time.

The only this we must worry about right now, is the exponential increase in the COVID cases in India and we all have a major part to play in taming this pandemic.

Your thoughts regarding this would be highly appreciated.