The government on Monday said India’s near-term macroeconomic outlook is vulnerable to disruption of trade with China due to the coronavirus outbreak. Coronavirus has already caused massive disruption across the world, forcing airlines to reduce flights and adversely affecting a range of businesses globally and in India.
“As is true for the world at large, India’s near-term macroeconomic outlook is also vulnerable to disruption of trade with China and second-round effects arising from expected slowdown in global growth,” Minister of State for Finance Anurag Thakur in a written reply to a question in the Lok Sabha. However, the latest available data on trade and domestic output indicators do not suggest any immediate adverse impact on the economy, the minister said.
“Additionally, a positive impact on India’s economy may arise from decline in global oil prices triggered by the outbreak of COVID-19,” Thakur added. Slump in oil prices has enabled the government to raise duties on petrol and diesel, allowing it to raise resources that would help in containing the fiscal deficit.
However, falling oil prices also result in lower remittances from overseas and global wealth funds pruning their investments into India. The coronavirus outbreak, first in China and now having being confirmed in more than 100 countries, has emerged as a key risk to human health as well as global growth outlook through numerous channels like trade, production and supply chain disruptions as well as decline in demand. The virus has affected over 100 people in India, leading to shutdown of schools, colleges, malls and cinemas in many parts of the country. Thakur said that the Ministry of Health and Family Welfare has been coordinating the efforts of the central government in terms of preparedness, control and containment measures and working with state governments in order to mitigate the impact of the virus outbreak in India. In order to address the possibility of trade-induced adverse impact on the economy, the government is constantly engaging with export promotion councils and trade bodies, particularly in pharmaceutical, electronics and automobile sectors where the supply chains are sourcing imports from China.
These agencies, Thakur said, have been put in touch with Indian Missions abroad to secure and transport inventories available with the existing suppliers.
Indian Missions abroad have also been asked to explore alternative sources of supply of raw materials in their respective countries for supporting India’s domestic production. The Reserve Bank of India Monday announced measures to inject dollar and rupee liquidity in the Indian markets to ensure that financial system functions smoothly.
📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines