International Economy And World Trade

Impact Of Lockdown On Export

Coronavirus has sent shock waves through the manufacturing and retail sectors. The lockdown has imposed restrictions on travel and work. There are so many labourers stranded in different parts of the country with no work, shelter, food and money. The pandemic outbreak made it necessary to stop manufacturing and export of major goods. The situation is the same worldwide and companies have gone ahead and cancelled many orders to save finances. This has led to a weakened international economy for the past few weeks and if it remains the same for the next three months, will result in negative growth.

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Job Loss In The Horizon

Indian export sector has seen a cancellation of orders over 50%. The future forecast is gloomy. The Federation of Indian Export Organization (FIEO) has estimated a job loss of over 15 million in export will hit the economy really hard. Most of these jobs are informal and do not have added security with people reeling under poverty. The International Labour Organizations states that over 40 crore workers are in the informal sector in India and they are at risk of facing the worst financial challenge during the pandemic.

The financial crisis of 2008-09 has already weakened the world trade and the present crisis will only exceed the trade slump. The merchandise trade will have a decline of 13-20% in the current year. The situation is the same with other sectors. Extended lockdown will worsen matters in the trade sector. It is going to push people to poverty making them vulnerable to social insecurities. Apart from the pandemic, the rising non performing assets in the export sector has hit the export economy. The government needs to take immediate action to overcome huge losses in the near future.

Plans For Revival

It is a time when the government has to find the balance between livelihood and life. Relief packages from the government is the need for the hour. Relief packages for exports will revive the sector. Partial lockdown has to be considered and industries have to be allowed with minimal workforce. The companies should wake up to the new normal. They employ half the workforce and adhere to social distancing, sanitization and safety. An interest free loan will help exporters to expend wages, EOF, ESIC and utilities waiver for the current quarter. Extension of pre and post shipment credit on their maturity, automatic enhancement of limits to address challenges of liquidity.

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