Impact of Covid 19 On Indian Economy

Impact of covid19 on Indian economy
Introduction
 Lockdowns were announced in Kerala on 23 March, and in the rest of the country on
25 March.
 By mid-May 2020, five cities accounted for around half of all reported cases in
thecountry: Mumbai, Delhi, Ahmedabad, Chennai and Thane.
 On 10 June, India's recoveries exceeded active cases for the first time. Infection rates
started to drop in September, along with the number of new and active cases.
 Daily cases peaked mid-September with over 90,000 cases reported per-day, dropping
to below 15,000 in January 2021.
Negative impact of COVID-19 pandemic on the lifestyle
• No difference between the two groups was found. People who decrease the junk food
consumption (29.8%) were significantly more representative than those who increase
it.
• The sudden outbreak of coronavirus disease 2019 (COVID-19) caused unprecedented
pressure on the community and the national health systems.
• The irrepressible prioritization of the treatment of COVID-19 has diverted all
resources to the care of this enormously increasing patient population.
• Severe restriction of daily life, including lockdown, to prevent the spread of the
COVID-19, affected the management and access to treatments of patients with these
disorders.
SECTORS WHICH WAS AFFECTED BY COVID19

 The government imposed nationwide lockdown in late March to combat the spread of
the novel disease.
 After six months of closure India has the second highest number of cases in the world
with more than 5.73 million positive cases.
 The government lifted lockdown restrictions in a phased manner while the shutdown
took a toll on the country's economy.
 The lockdown restriction halted the most economic activities and led to job loss of
millions of people and revenue streams.
 The government took precautionary measures to curb the virus spread by restricting
the movement but the virus wreaked havoc in the country.
Aviation
 After the Government of India indefinitely suspended tourist visas, airlines are said to
be working under pressure.
 Nearly 600 international flights to and from India were cancelled for varying periods.
 Around 90 domestic flights have been cancelled, leading to a sharp drop in airline
fares, even on popular local routes.
 In order to make debt-laden Air India more attractive, the government changed the
bidding parameter in October - bidders will now quote enterprise value instead of
equity value.
 This means that the bidder will be able to quote how much cash it would give and
how much debt of the airline it would be able to carry.
 During the lockdown period, airlines were encouraged to utilise their fleet for
movement of Cargo.
 Even passenger flights were allowed to carry cargo with special permission.
Tourism
 India is big on cultural and historical tourism, attracting domestic and foreign
nationals throughout the year.
 It does not come as a surprise that a large number of confirmed COVID-19 cases in
India include foreign tourists.
 But with visas being suspended and tourist attractions being shut indefinitely, the
whole tourism value chain, which includes hotels, restaurants, attractions, agents, and
operators is expected to face losses worth thousands of crores.
 Experts believe the tourism industry is likely to take a massive hit, and it could end up
crippling the industry for the foreseeable future.
 The tourism sector, which contributes nearly 7 per cent of India’s annual GDP,
comprises hotels, homestays, holiday homes, motels and more.
 However, since the pandemic has hit, the government has been ignoring the tourism
industry.
 The tourism industry is undergoing one of its biggest existential crises.
 Spinning under the pandemic’s colossal blow, nearly 30% of inbound tour operators
in India may shut their shops permanently; however, this figure could be as much as
60 to 70% as per some estimates.
AUTOMOBILE SECTOR
• As per an ETAuto report, passenger vehicle sales in April are likely to see an 11 per
cent drop.
• While auto companies are better prepared to deal with the crisis this time, it will
become a challenge for them if the infections continue to rise beyond May.
• COVID-19 will impact all stakeholders in the value chain who will experience both
short and medium term impact.
• This could range from shortage of raw material, shifting of production to other
countries, liquidity crunch to delays in availability of models, deferred launches and
shrinkage in consumer demand.
• Deloitte India recently issued a report on the impact of COVID-19 on India’s
consumer business segments.
• According to the report, the sector has inventories sufficient for short-term support,
but lack of single, critical components can hurt OEMs.
• The analysis report takes various approaches to possible outcomes of this pandemic
from the point of view of an optimist and pessimist.
• The report begins by stating that the pandemic is expected to lead the country towards
a major slowdown.
TRANSPORT
 After Prime Minister Modi extended the nationwide lockdown to 3 May, Indian
Railways suspended all services on its passenger trains and all ticket bookings
indefinitely.
 On 8 May, the Aurangabad railway accident occurred due to confusion related to the
pandemic. Public transport across the nation was affected.
 Transportation is one of the major sectors, which has been severely affected by the
impact of the COVID-19 pandemic.
 A survey was conducted by the Centre for Public Policy Research (CPPR) from June
to July 2020, among experts from the transportation sector to understand their
perception of the effects of the pandemic on the sector in India.
 A total of 15 experts consisting of academicians, practitioners, policy makers and
researchers, from different parts of the country, who were closely working with the
transportation sector were interviewed.
REAL ESTATE
• However, listed players being large in terms of scale are expected to gain market
share in the future.
• Geojit Financial Services has a negative view on the sector.
• "The real estate prices have a negative view, malls and large commercial spaces are
likely to see fewer footfalls leading to falling in rental incomes of these players," it
said.
• The real estate sector is one of the largest employment generators in the country and
has a multiplier effect on around 250 allied industries.
• The sector is expected to contribute to around 13 percent to the country’s GDP by
2025.
• However, the year 2019 has been a mixed bag for the Indian real estate industry,
having attracted investments worth- USD 5 billion.
• Around 66 percent of these investments were in commercial real estate market owing
to healthy demand from private equity investors for stable rent yielding assets.
• On the other hand, the residential real estate sector has witnessed poor demand and
lower absorption in the past few years owing to the economic slowdown, the NBFC
crisis, cynical buyer sentiment and developer defaults. This has led to higher unsold
inventory across the major cities in India.
Impact of COVID-19 second wave on economy
 The impact of the second wave of the coronavirus pandemic on the economy is likely
to remain muted as compared to the first wave, the finance ministry said in its
monthly economic report.
 Admitting that the second wave of the pandemic has posed a downside risk to
economic activity in the first quarter of FY2021-22, the report said "there are reasons
to expect a muted economic impact as compared to the first wave.
 Learning to 'operate with COVID-19', as borne by international experience, provides a
silver lining of economic resilience amidst the second wave".
 Adding, GST revenue registered another record high of Rs 1.41 lakh crore in April,
indicative of continual economic recovery.
CONCLUSION
 But it significantly indicated that the current downturn seems primarily different
from recessions of the past which had jolted the country’s economic order.
 Whereas the nations, conglomerates, corporations and multinationals continue to
understand the magnitude of the pandemic, it is undoubtedly the need of the hour
to prepare for a future that is sustainable, structurally more viable for living and
working.
 While the unprecedented situation has caused a great damage to the economy,
especially during periods of lockdown, the nation will have to work its way
through it, by introduction of fiscal measures.
 As the national government envisions, protection of both lives and livelihood is
required. The economic activity must begin gradually after screening of the labour
force.

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SECTORS WHICH WAS AFFECTED BY COVID19

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