COVID-19’s Impact on the Economy of India
The Covid-19 epidemic is one of the major disasters in the history of pandemics. The impact of corona virus pandemic is very disturbing and it has spared no one with its ill effects. There has been a major increase in the death rates across the world. Not only people are losing their loved ones but they are also losing their jobs and their source of income. Economic activities of more than 100 countries have been affected and some of the countries have even asked for monetary help from IMF.
Impact on Economy of India:
India is a developing economy and after the Prime Minister Narendra Modi had announced 21 day lockdown for the safety of people, the country has observed a high unemployment and Economic depression. India has observed a great decrease in growth of the income and government revenues as the novel corona virus hits Economic activities of India as a whole. According to a recent study the country has observed a job loss of 40 million people, majorly in the unorganized sectors.
Schools and colleges have been shut down; sports events such as IPL are postponed, businesses across the world like entertainment, hospitality, aviation, restaurants, hotels, pubs, malls, transport and factories have also faced major negative impacts in terms of their economy. Due to the fear of corona virus people were not going out of their houses even to buy daily necessary items, all these have somewhere contributed in affecting the economy.
There has been a cut in the global growth from 2.9% to 2.4%, and it may fall as low as 1.5% according to the Organization for Economic Co- Operation and Development (OECD).
The lockdown in India will have a major impact on the consumption level which is the main element of GDP. There will be a disruption of global trade and supply chain this will majorly affect the countries that are strong exporters and also those countries which are importers.
- Total electronic import of India is equal to 45% that of China. India imports approximately two-fifths of organic chemicals and one-third of machinery from China along with automotive parts and fertilizers.
- Also approximately 90% of mobiles and 65% to 70% of active pharmaceutical ingredients are imported from China to India.
There will be an expected global trade fall up to 32% in the year 2020 according to the World Trade Organization (WT0).
Sectorial Impacts:
Labour sector:
- This sector is the worst impacted as most of the labourers lost their jobs as most of them were engaged in construction companies and were daily wage works.
- Quarantine and travelling restrictions have left Indian factories short of labours.
- The country has seen people moving from urban areas to rural areas.
Restaurants:
- According to the NRAI which represents may restaurants have advised its restaurants to shut down. Also all the restaurants, clubs, pubs, cafes have been shut down according to the orders by the government. Also orders on online food delivery platforms such as zomato and swiggy have experienced a major fall of about 60% during the pandemic.
Food and Agriculture:
- This sector contributes majorly in GDP to the employment sector. The supply of food and agriculture products such as dairy products, edible oils and cereals will be highly affected this year.
- The Agro- chemical companies which deal with the import of raw materials and export for finished goods will also be affected.
- The online food grocery also suffers a great loss due to the lack of delivery vehicles.
- There has been a major loss in the consumer demand for commodities such as sea food, grapes and mangoes.
Online business:
- This sector contributes 10% to the Indian GDP and its major segments are healthcare, household and personal care products, and food and beverage sector.
- Due to the fear of corona virus people are avoiding to stock essential commodities such as rice, flour and lentils due to which their is rise in the sales of FMCG companies which saw it fall in trade due to disrupted chain supply.
MSME:
- This sector contributes 305 to 35% to the Indian GDP. Maharashtra, Tamil Nadu, and Madhya Pradesh have the highest number of registered MSME’S according to an estimated study by AIMO a quarter of over 75 million is facing closure and if the closure still continues for four weeks then if will affect the employment of 114 million people affecting the GDP.
- Garments, consumers goods, logistics have faced a decrease in the business and the MSMEs engaged is still functioning but is likely to isolate due to the purchasing capacity and plunging liquidity constraints.
- Since most of the MSMEs depend on the loan funding from the government, there has been a relief since the RBI had announced a three months repayments of loans and reduction in the repo rate.
Stated above are some of the negative impacts that the corona virus has on the economy of India. But this pandemic has all taught us many things. Many Multi National Companies have now shifted from physical to online platforms. People have now started working from home. The digital world got a push during this pandemic as people have now started using apps like PayTM, Google pay for the payment instead of using cash.
The schools and colleges have now started operating online on zoom meeting, Google meets and Google classrooms. Students are now able to access their assignments online and they can now give their exams online through various platforms. This crisis also highlighted the importance of investing in technologies and such as cloud data, self service capabilities, e-business, e-governance and cyber security.
This pandemic has also made us realize that we should never forget to appreciate what we have in our lives and we should never forget to thank god for the lives that we have. At CSS Founder, we aim to provide businesses with our world-class assistance, at minimal fee. Our team of professionals aim to help businesses grow despite the serious impact of the pandemic.
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Liberty Magazine – Economic Website
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