Macroeconomics For Managers Assignment Sample

Introduction: Macroeconomics For Managers

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The pandemic of Covid-19 has had an enormous impact on macroeconomics in terms of emerging economics related to the market. Most countries of the world have been affected negatively by the pandemic of Covid-19, and as a result, all the nations have faced damage to their economy. Several data collected from different sources indicate the point that the pandemic of Covid-19 has also brought considerable change in the lives and livelihoods of the people. At the same time, emerging markets have faced the consequences of macroeconomics. They were also eyewitnesses of poor public health as the Coronavirus affected people's health negatively. Considerable changes can also be seen in the countries' GDP; in emerging markets, the GDP per capita declined by approximately 6.7%.

Compared to before, the declined rate of GDP was approximately 3.6 in countries of low income. According to the economist, the excess mortality rate was almost 75% more than in the advanced economy. India had faced the worst situation compared to the economic condition before the pandemic, and they confronted the worst decline in the economy. Millions of workers were trying to return to their hometowns as the lockdown was going on everywhere, and most of the workers lost their jobs or were at risk.

Discussion

The current macroeconomic situation of the country India in the case of post Covid-19

As per the statement of the Minister of Finance of the country, India has performed well in the current decade, and the benefit of it is enjoyed by different sectors of the country such as banking, business, the welfare of the farmers, transparency in tax and many more sectors. Although small and medium enterprises faced an enormous problem at the time of Covid-19, and at that time, it seemed challenging to recover from the situation (Jha & Kumar, 2020). The corporate industries and non-banking sectors have to gain a healthy balance sheet, and Country India has recovered a lot from the effect of the pandemic of Covid-19. It is expected that the economy of India will grow by approximately 6.5 per cent in the year 2023-2024. This year's projected growth of the economy is 7 per cent by the higher authority of India. If the government achieves the goal, it will be considered one of the fastest-growing economies in the world (Timesofindia.indiatimes.com, 2023). The time when India was recovering from the economic crisis of the Covoid-19 pandemic, inflation and conflict happened with Russia-Ukraine. As a result, the economy of India had to stage sectors of recovery based on boards, and it was positioned to the path of growth in the time pre-pandemic in the year 2023. A survey was conducted about the situation, indicating that the expected growth and the main reason behind such a situation is that the capital investment cycle can unfold in India. It can strengthen the balance sheet of the banking and corporate sectors. The update of the IMF on the world economy maintains the forecast of GDP in the current financial year, and the GDP rate in the current year is 6.8%. Therefore, the recovery of the country's economy has been made successful, and the corporate and non-governmental sectors have become able to gain a balance sheet that is healthy for the consumers and the nation's economy. The country has already recovered from the situation, and the Ministry of India needs to look forward to the next phase.

Figure 1: Real GDP growth rate of the year 2022-2023

(Source: reuters.com, 2023)

In March of the year 2020, the World Health Organization announced Covid-19 as a pandemic caused by the Coronavirus as a considerable number of people were getting attacked by this virus. The governments of all the countries decided to announce a lockdown in most places in the country. Therefore, there is no doubt that the countries' economic condition suffered, directly affecting the GDP rate. There is no exception about India, and massive changes have been seen. The complete budget for 2020 was assimilated, and it has been seen that the government of India provided 3.5 per cent of GDP.

From Figure 1, it has been seen that the country India has been facing different kinds of problems, ups and downs over the last few decades and the economic conditions, and it can be mentioned that the present financial situation of the country is better than before time. In the year 1979, the GDP of the country was low in comparison to the other years. After the pandemic of Vivid 19, the rate of GDP was reduced as millions of workers were trying to reach their hometowns. Due to the lockdown, the job of that person was at risk. In the year 2020, the GDP rate of the country India was 1.87, it is a considerably low number. Most of the sectors that provide GDP to the country have slowed down, and the people who are associated with the agriculture industry. In 2014, the amount of GDP was 2% trillion, and in 2020-2023, the GDP was 3.75% trillion. Therefore, the country India has become able to recover from the situation of the pandemic of Covid-19.

The macroeconomic policies that the government of India takes in terms of dealing with the problems that have occurred during the time of Covid-19 lockdowns

Microeconomic policies are defined as the measures taken by a central bank or government to influence the performance and economic health of the country overall. The main aim of the macroeconomic policy is achieving the economy's growth and, at the same time, price stability and providing employment to most of the country's people. Several policies are included in the microeconomic policies, and they are monetary policy, fiscal policy and the policy of exchange rate. The fiscal policy of a country is governed by its budget, and it also can provide a summary of the expenses and income of the government and provide a clearer understanding of the country's financial condition.

Figure 2: Unemployment after the Covid-19 pandemic

(Source: statista.com, 2023)

In the labour market of India, there is a small number of people working formally, and most of the people of India are employed informally. The majority share of households depends on self-dependent employment and precarious jobs. Approximately 10 per cent of the people of the whole country have been employed formally. They are working in a safe working environment, and the rest of the people of India are not working in a secure environment. In the figure2, it has been seen that the number of employees has decreased considerably, and the government needs to take steps to get a solution to this situation. The government of India wants to increase the number of labourers who are employed formally. From 2005 to 2012, the number of employed employees rose officially from 33.41 million to 38.56 million. In the crisis response, the Government of India tried to minimize the damage that was done by the pandemic of Covid-19 and the government has taken the help of 20 trillion rupees which has to make sure that the scheme is going on successfully and in a fair way (Brookings.edu, 2023). The government's efforts have considerably impacted mitigating adversely, but in this way, the space of fiscal spending is narrowing. Therefore, it is required that the World Bank and other financial institutions provide help in stepping up and helping the country get rid of this situation.

The Reserve Bank of India, or RBI, has a considerable role in fighting the problems due to the COVID-19 pandemic lockdown. The bank takes Various policies, such as lead financial system regulator, debt manager for the public, and operator of the settlement and payment system. The Monetary Policy Committee (MPC) decided to obtain triple objectives to minimize the negative effect of Covid-19 on the people of India. In terms of easing the hardship of the economy and at the same time checking the rate of inflation, the Reserve Bank of India has decided that they will slash the rate of interest and thy decrease the repo rate to 4 per cent for the welfare of the people who lives in the country India (Hindustantimes.com, 2023). They make the ratio of cash deserve lower so that it can provide liquidity additionally and also can help the aid banking system. The main goal of this policy was to ensure that there should be no part that will face the liquidity of the financial system. It is essential to provide the regulator of a bank that the interests of both the borrowers and the lenders can ensure the stability of the design of the bank at that time of Covid-19. Conversely, the policies want to help and protect the borrowers regarding their financial condition. These policies bring a substantial positive impact on the economy of the country. India and the government have almost recovered from the adverse effect of the pandemic of Covid-19.

The impact of these policies on the private sector, particularly firms

The pandemic of Covid-19 has affected the different sectors, such as the corporate sector, negatively, and there are a massive number of people in India who are engaged in doing business and businesses that are small or medium in size has been affected the most in a negative way (Mittal & Sharma, 2021). Several policies have been taken by the government of India and the banks in India, and the policies have provided a lot of help to the private sector and the people who are associated with firms in the country of India. Without the help of these policies, the pandemic of Covid-19 can bring more negative impacts on firms, and the people who are working in the firms may become unable to pay their debts. At this time, the share of the debt issues of the corporate rises from 23 to the percentage of 36 under the scenario of baseline (Elibrary.imf.org, 2023). The private sectors that have been affected the most are manufacturing, construction-related services and the services that are related to contact-intensive. The weaker position of their liquidity has also increased the risk of getting harmed, and they became unable to pay their debts. There are several studies that have been conducted to find the effectiveness of the policies on the private sector and firms, and it has been seen that the policies supported the farmers positively. The guidelines provide them with help so that they can minimize the risk of liquidity during the time of pandemic of Covid-19. As an example, it can be mentioned that ICR-based debt-at-risk in the scenario of baseline fell from 26 per cent to 36 per cent and the share of debts that the firms issue goes down from number 35 to the number around 8.6 per cent with the cash flow in a negative way. The policymakers have also left an impact on corporate solvency, and it has been found that it is less pronounced. The main intentions of the policymakers were to implement the policies and help the people in terms of liquidity (Ebeke et al., 2021). Corporate policies can bring a considerable impact on banks, public sector banks, and non-banks, and these sectors are comparatively weak in terms of starting; therefore, the policy makes helps the people who are associated with the organizations in terms of minimizing the risk of liquidity. The forward-looking multi-year corporations have suggested the fact that the impact of Covid-19 on an overall basis depends on the speed by which an organization is going to recover from the negative impact of the pandemic of Covid-19 and the lockdown that was going on there at that time. Most of the private sectors were affected negatively during this time, and the managers of the firms and the private sectors were suffering from tension as they were unable to find any kind of solution to the problem of liquidation and paying their debt. In this time, the policymakers have helped the managers of the firms and let them free from the tension of paying their debts.

The private sector in India is spread over a huge range, and a massive number of people depend on this private sector. Therefore, it was necessary to take care of the private sector so that the job of the people did not become risky to them. Another important point is that the government of India has tried to engage more people in the work formally. The private sector managers are responsible for a massive number of people, and due to the covid-19 pandemic, they need to follow different kinds of problems. At this time, the policymakers have helped them to get rid of such a situation and, at the same time, pay the debts.

Conclusion

In conclusion, it can be stated that the pandemic of Covid-19 has affected negatively all businesses worldwide and the businesses that were small and medium size that were affected the most. The economy of a country is based on businesses, and due to the negative effect of the Coronavirus, the GDP of the countries has also reduced. The country India is not an exception than that, and the GDP of this country is also reduced. There are several policies that are taken by the government of India and the banks, such as the Reserve Bank of India. The main aim of the policies was to help the people of India by giving them financial advice. Most of the labours of India are employed in an informal way, and the government is also trying so that most people get their employment in a formal way, and poverty can be controlled in this way. The government is also trying to bring employment to the rural area, and it can help their people to get employment in a fair way. On the other hand, the managers of the firms were stressed as they did not have any way to pay the debts, and at this time, the policymakers helped the managers by providing them with a clear understanding of liquidation and helping them in paying their debts.

References

Journals

• Ebeke, M. C. H., Jovanovic, N., Valderrama, M. L., & Zhou, J. (2021). Corporate liquidity and solvency in Europe during COVID-19: The role of policies. International Monetary Fund. Retrieved from https://fondazionecerm.it/wp-content/uploads/2021/03/IMF-Corporate-Liquidity-and-Solvency-in-Europe-during-COVID-19.pdf [Accessed on 23rd July, 2023]
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Websites

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