As the novel coronavirus (Covid-19) pandemic unfolds, India seems to be heading towards an economic meltdown of an unprecedented scale.
The sheer magnitude of the economic unrest triggered by the national lockdown, which was announced by Prime Minister Narendra Modi on 24 March to contain the spread of Covid-19, is unheard of in the 70+ year history of independent India.
This unrest is far more severe than the Financial crisis of 2007–08, which toppled the Indian financial sector but did not put a stop to production. After all, the Indian economy was in a sweet financial spot back in 2008, as it had been growing in leaps and bounds in the years leading up to the crisis. The Covid 19 crisis, on the other hand, came at a time when our economy was already rolling down the hill.
Although the lockdown may have been absolutely necessary to contain the outbreak, it will not eliminate the problem. It just seems to provide some breathing space for our medical infrastructure.
At the same time, private investors and entrepreneurs are suffering the brunt of the credit crunch. After all, consumer demand, the central pillar of the Indian economy, is plummeting due to a downward trend in consumer’s income levels.
When confronted with this uncertainty, how do you stay afloat… financially?
Here are three practical tips that might help.
- While the actual impact of the Covid-19 outbreak is likely to vary from person to person, everyone can benefit from knowing where they stand.
Whether you are in a good spot (financially speaking, of course) or you could do a little better, simply “knowing” can help reduce stress and anxiety in the long run.
- For those of you whose financial decisions are greatly affected by the current economic slump, you ought to revisit your monthly/annual budget.
A second look at your spending habits will help you to fine-tune your financial plan, as necessary.
- It is pretty much impossible to say for sure how long it will take until either the virus ‘runs its course’ or an effective vaccine is developed, allowing life to return to some semblance of normalcy, so you can finally stop living off of your savings.
So, what if your savings run dry before the worst is over?
Well, in that case, it is crucial to identify your next source of revenue. Not only does some financial cushion help you sleep better at night, but it also has practical benefits, as some of the options that may be right for you could take weeks or longer to establish.
Over time, and possibly with the combination of science and social distancing, the Covid-19 virus will grind to a halt. It is absolutely certain that we are going to get through this crisis. What is less certain is when.
For now, though, I encourage all of you to refrain from making emotional decisions. Use the current state of affairs to your greatest ability. In short, control what you can control. The rest of it will fall into place sooner or later.