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Coronavirus’ Impact on Indian Economy

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Source: economictimes.indiatimes.com

Coronavirus is a large family of viruses that result in illness. The symptoms range from the common cold to severe issues such as MERS-CoV (Middle East Respiratory System). This virus is a novel virus that is being identified in humans for the very first time. The first Coronavirus case was reported in Wuhan and it became an outbreak on 31 December 2019. 

Impac of Coronavirus on Indian Economy
Source: m.jagranjosh.com

To fight the battle against this virus, Indian government announced a nationwide lockdown. The lockdown began in March and it is still going. Indian economy was shut for almost 2.5 months and is currently on a Unlock 1.0. 

An industry survey conducted by FICCI and Dhruva Advisors (Tax Consultancy) revealed that businesses are struggling with extreme amounts of uncertainty about their future. The sample size for this study was 380 companies across the sectors.

Coronavirus BBC
Source: www.bbc.com

The survey also demonstrated that COVID-19 is going to bring an empty pockets’ phase for Indian businesses and start-ups in coming months. Several companies are looking to cut down their manpower and thereby retrenching several employees from their systems. The pandemic has also resulted in unprecedented collapse in economic activities. 

Industrial Sales and GDP

Firms are expecting a downturn in their sales in fiscal year 2020-21. Industrial Sales is one of the most important factors for GDP growth. Lesser the sales, lower the GDP growth will be.

Coronavirus GDP
Source: akm-img-a-in.tosshub.com

FICCI said, ““The survey clearly highlights that unless a substantive economic package is announced by the government immediately, we could see a permanent impairment of a large section of the industry, which may lose the opportunity to come back to life again.”

As per Bradstreet, Coronavirus has disrupted the global supply chain and brough the severe demand shock. The Indian economy began to show a few positive signs towards the end of 2019, but the pandemic has offset those green signs of recovery. The revised GDP growth for India is reduced by 0.2 points (4.8%) for 2020 and by 0.5 points (6%) for 2021. It has an auxiliary chance of getting reduced further as it totally depends on the duration of the pandemic. 

Urban transactions and its impact

Coronavirus KPMG
Source: www.regtechtimes.com

As per the report released by KPMG, reduction in urban transactions  has led to a steel fall in the consumption of non-essential goods. And, due to this weak domestic consumption, investments in India will witness a halt that will further add pressure on the growth. However, many big firms have started to embrace de-risking strategies and are planning to shift their manufacturing bases from China to India. This might create significant opportunities for India. 

But! But! But!

Opportunities also depend on how rapidly India recovers from this pandemic. If India does not exhibit positive signs in addressing the supply chain issues, the opportunities won’t knock at India’s door. 

_________

There are several other factors that have a greater tendency to impact Indian economy due to the pandemic. We will explain those factors in our next stories. Till then, keep reading and keep sharing your valuable thoughts with us. 

Source: Jagron Josh

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An avid researcher who aims to uncover all major political and business events through a wide lens. From understanding "breaking news" to reading impactful research papers, she always endeavors to contribute something new with her writing. She has presented her work at world-class platforms such as CCI (Competition Commission of India), IIT-D's Industry Day (organized by Indian Institute of Delhi), etc. Her serious demeanor changes in front of the Indian cuisine and she wishes to taste every possible cuisine in her life while she travels all exquisite corners of the world.