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HCQ Dilemma

One of the recent articles stated that the USA has demanded India to supply them with HCQ for the rising corona malaria, and it is also recommended by the scientists and doctors that HCQ can to certain extent cure virus victims in the USA. Nonetheless the USA is not the only country demanding India for the HCQ drug, there are multiple other countries which are demanding India for HCQ suppliers. This signifies the shortage in the world market for the HCQ drug. 

The HCQ drug is a drug used to combat and help victims or patients of coronavirus recover. Knowingly, as the cases of coronavirus in the USA are rising exponentially, which is leading to an economic instability (Exchange rates are becoming more volatile), and this is one of the main reasons why the demand for the HCQ drug is more than the supply for it leading to a shortage in the market. According to one of the recent news articles there is a shortage of the HCQ drug in Rajasthan.

The shortage in the world market will continue to exists, and by India supplying the drug to other countries can help India strengthen international relationship; subsequently improve the international trade and affairs and not only this, by supplying the HCQ drug to the; however, the increased international supply of HCQ to other countries can result in a shortage within in the economy; hence, there can be economic instability in the market, because shortage for the drug in the domestic market can reduce the chances of people being cured in the economy (opportunity cost) which can result in a unhealthy workforce continuing to lead to an inelastic PES. The lower PES means that the output/ Aggregate supply will be less responsive to the changes in price, which makes it difficult for the economy to use the Keynesian models (Macroeconomic model), hence making it harder for the economy to recover from economic downturn or recession. There are other drawbacks for India supplying thee HCQ drug to other countries, such as there may be internal or domestic conflicts about the drug transfer by the people or victims in India, this can result in a political instability, which further adds up to the negative effects for the economy such as price volatility, exchange rate instability and more.

Furthermore, the other benefits for India giving the HCQ drug to other countries is that they will receive export revenue from USA and Brazil, which can help India benefit from the multiplier effect because export revenue is in injection of money into India economy (Circular flow of income), which can help India increase their GDP to a greater proportion than the injection into the economy.

Conclusively, there are various benefits and drawbacks to the supplying of HCQ drug to other countries as mentioned above. In order for the Indian economy to attain the maximum benefits, the government should supply the HCQ drug in order to maintain international relations and benefits from the injections received from the exports which can help increase Indian GDP, and to counter the problem of the shortage in the domestic market; the Indian government should increase the supply for the drug by trying to make labour more mobile, which can be incorporated via providing workers with appropriate health and safety requirements and providing them with incentives, which may encourage some workers to work, hence help India maintain the supply of the drug in the economy.

 image source- business standard
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