Shishun Huang, Qinghao Liu, Qianfan Shi

Indian Finance Minister Nilmara Sitaraman said on October 27th that India has shown signs of economic recovery, but judging from the current situation, its prospects are still very bleak.

According to the latest World Economic Outlook report released by the International Monetary Fund ((IMF)) on October 13th, the global economy will contract by 4.4% in 2020, 0.8% higher than the optimistic forecast in June. However, the forecast for India's economic growth is desperate, contrary to the upward revision of global economic forecasts, falling sharply from 4.5 per cent in June to 10.3 per cent, a drop of nearly 2.3 times. Although under the influence of the COVID-19 epidemic, India's economic malaise is not an isolated phenomenon, but judging from India's own growth in recent quarters, this year can be described as even worse. India’s economy grew 4.2 per cent in 2019, below the 7 per cent or so expected by domestic experts and has slowed for several consecutive quarters, according to IMF. Unprecedented negative growth will not only dash Modi's ambitious goal of a "$5 trillion economy", but will also continue to affect India's economy back to a state of rapid development.

Obviously, this is closely related to the fact that the epidemic has not yet been effectively controlled. As of Oct. 26, WHO data show that nearly 8 million people have been diagnosed with COVID-19 in India, which is still one of the countries with the fastest case growth in the world. On the domestic side, employment is undoubtedly the most affected. After the COVID-19 outbreak, the Indian government cordoned off cities and repatriated a large number of workers to slow the spread of the epidemic, resulting in nearly 18 million job losses in April. By August, most of India's economic activity had recovered under short-term employment programmes, but the employment situation had not improved. India’s unemployment rate remained at 6.7 per cent in September, according to (Centre for Monitoring Indian Economy), the Indian economic monitoring centre. Indian economists believe that the employment crisis in India has been exacerbated by constant layoffs and insufficient market demand in the face of a weak economy.

At the same time, the loss of international orders in Indian manufacturing is in crisis. International orders from India's pillar industry, textile and clothing, have been flowing to India's neighbors recently, according to the South China Morning Post. Due to the demand for Christmas orders, many companies in Europe and the United States cannot take risks in uncertain India and can only deliver orders to factories in China, Bangladesh, Vietnam and other places. Chinese factories alone have received orders for dozens of tablecloths from ZARA in Spain and 800000 sets of underwear from the European Union, which originally belonged to India. Although experts say that due to competitive tensions between China and the United States, the flow of orders to China is only a short-term adjustment to meet holiday demand, however, factors such as the strong economic recovery of Bangladesh and the Indochina peninsula turning faster than India will continue to challenge the international competitiveness of India's pillar industries. Among them, Bangladesh's performance is particularly eye-catching, its economy will reach 3.8% growth this year. And it’s per capita GDP will surpass that of India, which has caused many Indian media to sigh with emotion: "A few years ago, we were talking about competing with China and the United States, but now we have to compete with Bangladesh first."

In response to these serious challenges, the Indian government has been introducing relevant policies to boost the economy. For example, the production-related incentive program (PLI), was launched in April to attract foreign investment. More than 20 companies, including Samsung Electronics and Apple's assembly partners, have pledged to invest 110 billion rupees in India over the next five years. India has also developed supply chain transfer plans with the United States, Japan and Australia, which will consider relocating some of their manufacturing operations to India. In addition, in mid-October, India's finance minister announced a new incentive plan to allocate an additional 3.7 trillion rupees for holiday consumption, hoping to generate consumer demand of 1 trillion rupees.

But in the post-epidemic era, IMF pointed out that the Indian government needs to step up efforts to control the spread of the epidemic, and only if the epidemic does not worsen can economic recovery be put on the agenda. Hans Timmer, chief economist for South Asia of the World Bank, believes that South Asian countries, led by India, need to give full play to their regional advantages on the basis of cooperation, so as to achieve economic revitalization. He said that the COVID-19 epidemic will have a profound impact on South Asia in the next few years, but at the same time, the world economy is also entering the digital age, which will enable South Asia to give full play to its advantages in technical services, eco-tourism and other areas. At present, it is a favorable time for South Asian countries to jointly participate in the value chain of the international market. Therefore, how India's economy will go in the future requires the Indian government to pay attention to its South Asian neighbors at the same time, cooperate with South Asian countries, and rely on geographical advantages to promote economic recovery in South Asia on the basis of properly dealing with the epidemic problem.

（Shishun Huang , Qinghao Liu，Scholars, Yunnan University; Qianfan Shi, University of Chinese Academy of Social Sciences）