ACCORDING to the IMF, the impact of the Russia-Ukraine war, tightening monetary conditions worldwide, the greatest inflation in decades, and the lingering effects of the pandemic will cause a general slowdown across the world, including India, in the upcoming year. India’s growth has been projected to decline to 6.8 percent after registering a healthy increase of 8.7 percent in the last fiscal year. However, finance minister Nirmala Sitharaman who is in Washington, asserted that India will grow at 7 percent this year. She, however, observed that the Indian economy is not exempt from the impact of the world economy.
Ukraine war has been the singlemost factor for the current setback to the global economy. In today’s globalized world, events in one part of the world trigger far-reaching fallout in other parts. There have been foodgrain and fuel shortages which have driven up prices and this has been a matter of great concern for developing countries.
The continuing war, however, is bad for the world economy as the shrinking of the US economy through the April to June quarter shows. A slowing US economy will have far-reaching effects on the world. And this is happening at a time when the global economy was gradually recovering from the debilitating fallout of the Covid-19 pandemic, a once-in-a-century event. The countries were opening up and letting the economy function normally. International travel has also returned to pre-pandemic levels.
The IMF’s dismal growth forecast for Indian economy is not a good news after a year of healthy growth. For two years after the advent of Covid-19 pandemic, Indian economy performed well below even some sub-saharan countries. The pandemic and the consequent lockdown also dealt a body blow to the global economy. And Indian economy was the worst hit, losing one-fourth of its GDP in the first quarter of 2020. The extended lockdown hit the economy hard leaving millions of people jobless. It also disrupted the supply lines and forced migrant workers to head home.
Kashmir economy also suffered. According to an estimate by the local business bodies then, the Valley suffered a loss of over Rs 50,000 crore during the extended lockdown from August 2019 to in May 2020. Its fallout on the ground was grim. Sectors of the economy like tourism, handicrafts, hotel industry, IT, transport etc were crushed. People were forced to shut down their old unviable businesses and start new ones. Now Kashmir is witnessing a bumper tourist year which has brought growth and jobs back.
But the ongoing war in Ukraine remains a danger. If the war drags on, the global economy, and with it the Indian economy, is likely to come under severe stress again. Therefore it is incumbent on the world to come together to resolve the crisis in Ukraine and find a solution that addresses the concerns of all the parties involved. Otherwise, as prophesied by leading economists, the world is heading inexorably toward recession.
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