Impact of COVID 19 on The Indian Economy
GLOBAL CONFIRMED CASES- 8,974,795
QINDIA CONFIRMED CASES- 440,000
CONFIRMED DEATHS IN WORLD- 469,159
CONFIRMED DEATHS IN INDIA – 14,011
The coronavirus outbreak has deeply shaken the global economy and its social impact has been so dreadful, that no government or health department has been able find its unequivocal cure. This pandemic has made the future of the global economy quite uncertain. Likewise, the impact of COVID 19 outbreak on the Indian economy has been quite disruptive. As claimed by our own government during the last budget being presented, India is already facing a “cyclic economic slowdown”, and this pandemic has only worsened the situation, also making India the 4th worst affected country due to COVID 19 outbreak.
According to the Ministry of Statistics, India’s GDP growth went down to 3.1% in the 4th quarter of FY 2019-20. According to The World Bank and several rating agencies, this will be India’s worst recession and lowest figures since 1990, moreover State Bank of India’s research estimates a 40% GDP contraction if the last quarter of FY 2020-21. Within 40 days, (from 15th March to 19th April) unemployment rose from 6.7% to 26% with the daily wage workers being affected the most. On 12th May, our Prime Minister addresses the country on national television and reassures by presenting an optimistic view, that post this pandemic how the Indian economy would be on the verge of becoming self-reliant or “atmanirbhar Bharat”. The funding that was provided to this scheme was ₹20 lakh crore, approx. 10% of India’s total GDP. In order to boost the MSME sector and promote business opportunities, RBI announced ₹8 lakh crore liquidity.
The agriculture sector has been one of the sectors that has not been able to sustain the shock waves of this pandemic. According to a research by Public Health Foundation of India, 10% of Indian farmers could not harvest their crops and out of those who were able to harvest, around 60% of them reported a fall in the total output. Analysing the current trends, it is expected that the price of agricultural products will rise by a significant amount in the coming future, due to fall in the output or supply.
The unemployment rate rose to 26% with just over a month’s time, however the fall in salary and wages of the employees is also something that should be taken care of. In order to reduce costs, almost all the firms and MNCs operating in India have resorted to a decrease or cut in the salaries of the employees, for a certain period. Being sceptical about their future, companies such as ITC, Hindustan Unilever, Dabur etc. have not undertaken any significant project or invested in any sort of research and development. It is expected, that if the situation does not improve in the coming future, the entire manufacturing sector in India might adopt this system, which would lead to a huge slump in the economy.
One of the sectors that experiences a sudden and direct impact of economics slowdown in the country id the financial sector or the stock market. On 23rd May, the Indian stock market posted its worst losses in the history. SENSEX fell by 4,000 points (13.15%) and NIFTY fell by 1,150 points (12.98%). However, on 25 March, one day after a complete 21-day lock-down was announced by the Prime Minister, SENSEX posted its biggest gains in 11 years, adding a value of ₹4.7 lakh crore (US$66 billion) crore for investors.
According to the Indian Association of Tour Operators (IATO), the travel and tourism sector had reported a loss of ₹8,500 crores since the pandemic. Since all the transportation modes being railways, airways, waterways etc. are not allowed to travel, the fall in revenue of tourism sector was expected and quite natural.
MSMEs and self-employed businessmen such as shopkeepers, salons, wedding planners etc. have had the worst face since their operation. Regardless of the lockdown being imposed or not, due to the rise in number of cases, people are now practicing social distancing with even more consciousness. Delivery service providers such as Zomato and Swiggy have reported a 60% fall in orders, even after taking proper precautions and measures.
COVID 19 virus has surely registered one thing in the minds of the working class, which is to have enough savings in the form of investment to survive during these times and that escaping the economic slowdown for any company regardless of its domain, sector, area of operations, profitability etc. is inevitable.
Now, the question that not only employers or economists, but the entire country asks, is when will the Indian economy recover? The simple answer is, it is beyond our prediction, but certainly not soon. Even before the COVID 19 outbreak, the Indian economy was not in a very good shape, so until and unless some cure of this virus comes in the market, the question of recovery is quite far-fetched.