Dr. Partha Ray, Professor of Economics, IIM Calcutta graced The Chamber's Managing Committee Meeting, held on 12th May 2020 in The Chamber premises. Dr Ray spoke about his assessment of the economic impact in the wake of the COVID19 Pandemic on the World, India and West Bengal in particular.

In his opening remarks, Dr Ray observed that when into a Pandemic there is an implicit perception bias which most of the times is pessimistic and that this was quite normal in any crisis. He provided comparative statistics of death toll of some earlier pandemics like HIV/AIDS (2005-2012) - 36 million, Spanish Flu Pandemic (1918) - 20-50 million and several others. Such pandemics throw open limitations of modern medical science and public health facilities.

Dr. Ray presented the global economic forecast figures released by IMF in January 2020. The world output growth projected in January 2020 was (-3%), that of the US was (-6%) and Euro Area was (-7.5%), with only China and India projecting positive growth of 1.2% and 1.9% respectively. The scenario drastically changed owing to the Pandemic; when compared to figures released in April 2020, with world growth projected at (-6.3%), US (-7.9%) and Euro Area (-8.8%), with China and India also indicating negative growth at (-4.08%) and (-3.9%) respectively. The impact had been much more than the global financial crisis of 2008-2009 and has affected all the countries the world over. Economic fall-out of the Pandemic depends on factors which are uncertain and contingent upon several factors including intensity and efficacy of containment efforts, extent of supply disruption and others. Dr Ray advised that many countries would face multilayered crisis, comprising health shock, capital flow reversal etc.

With respect to the Indian economy, Dr. Ray stated that the Indian economy had been slowing down with the nine quarter-long deceleration even before COVID-19. Investment had gone down, consumption fell, consequently resulting in significant loss in employment. COVID-19 caused supply disruption, subdued demand and put further stress on banking and financial sector. In terms of preparedness, India entered the pandemic from a weak position; weak health infrastructure with significant shortage of physicians, nurses, hospital beds and low health expenditure are matters of concern. According to Dr. Ray India's economic impact is expected to be large but its fiscal impact is likely to be 0.8% of GDP. Dr Ray explained in detail the high mobility aspect of India.s working class which would cause adverse economic effect under the COVID-19 situation.

Dr. Ray spoke about the Pandemic's likely effects on the economy of West Bengal, the sixth largest State in terms of economic size with an increasing service sector and high MSME establishment (14% of total establishments in the country). The State has faced a decline in formal organized industry and expanding unorganized sector with low productivity. Further, there is already a substantial fiscal stress in the State. West Bengal also had a prevalence of out-migration and all these factors are going to determine the shape of things to come in the near future.

Dr Ray concluded that all factors are based on the assumption that the COVID-19 curve is likely to flatten by end of June 2020. However, if that does not happen then we still do not know what will be the shape of things to come. Along with loss of human lives, adverse economic impact could be substantial. The final impact will depend upon flattening of curve, incidence of death tapering off, introduction of monetary and fiscal stimulus and absence of fresh external shocks. Dr Ray concluded that the .new normal. could be a less globalised world unless a collective corrective action is taken.

On request from members, Dr Ray agreed to share an abridged version of his presentation.
The President on behalf of the members profusely thanked Dr Ray for an excellent presentation covering a detailed analysis of the complex situation due to COVID-19.