IMPACT OF COVID19 ON INDIAN ECONOMY(SECTORAL ANALYSIS)

A DISSERTATION

SUBMITTED TO THE UNIVERSITY OF LUCKNOW FOR THE DEGREE OF

MASTER OF COMMERCE( APPLIED ECONOMICS)

BY

AKANKSHA

Under the Supervision of

DR. R.K. MAHESHWARI

Dean

Department of Applied Economics

Faculty Of Commerce

University Of Lucknow

DEPARTMENT OF APPLIED ECONOMICS

FACULTY OF COMMERCE

UNIVERSITY OF LUCKNOW

SESSION 2021-2023

DECLARATION
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I, Akanksha , student of Master of commerce (Applied Economics) Batch 2021-2023 of
University of Lucknow, hereby, declare that the Dissertation entitled “ IMPACT OF COVID 19
ON INDIAN ECONOMY” is a result of my research work and our indebtness to other work
publications, references, if any, have been duly acknowledged. I shall be solely responsible for
any plagiarism or other irregularities if noticed in the thesis.

I assert that the statements made and conclusions drawn are the outcome of my research work. I
further declare that the best of my knowledge and belief that the dissertation does not contain any
part of any work which has been submitted for the award of any degree/diploma/certificate in
this University or any other University in India or abroad.

Place: Lucknow

Date:

AKANKSHA

ACKNOWLEDGEMENT

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No great endeavor is accomplished and successful without some helping hands. Every task needs
some guidance , encouragement and assistance for its completion and fulfillment. I would like to
take this opportunity to thank all who contributed directly or indirectly in preparation for this
research and guidance doing my dissertation.

It is my pious duty to convey the UNIVERSITY OF LUCKNOW for giving me a chance to

undertake my dissertation in learning in difficult surrounding. Finally, I would like to extend a
vote of thanks to my mentor Dr. R.K. MAHESHWARI, Dean of faculty of Commerce and all the
faculty members who guided me throughout the project.

I owe no matter what I have learned and that I am deeply duty bound to him for providing me the
impetus and therefore the support of their recondite information and skill.

I would also like to thank my friends and family for their love and support during this process.
Without them, this journey would not have been possible.

Finally, I would like to thank all of the participants in my study for their time and willingness to
share their experiences. This work would not have been possible without their contribution.

With sincere regards,

AKANKSHA

TABLE OF CONTENTS

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LIST OF CONTENTS : PAGE NUMBER

1. Abstract 6
2. Introduction 7
3. Literature review 9
 Research gap 11
4. Research objective 12
 Problem statement
5. Research methodology 13
6. Impact Analysis of COVID19 on Indian Economy 14
 Impact on Agricultural sector 17
 Impact on Manufacturing sector 20
 Impact on Services sector 22
 Impact on Informal sector 26
 Impact on Health sector 28
 Impact on Education sector 30
 Impact on Financial sector 31
7. Conclusion 36
8. References 38

LIST OF TABLES

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 1. GVA growth of different sectors
2. GVA growth of Indian economy
3. Growth rate of Agricultural sector
4. IIP index of manufacturing sector
5. Status of employment in pre and post pandemic period.

LIST OF GRAPHS

1. Graphical representation of GVA growth of different sectors

2. Graphical representation of GVA growth of Total Indian economy
3. Growth rate of Agricultural sector
4. Graphical representation of IIP index of manufacturing sector in INDIA
5. Estimated impact of coronavirus on service sector in India
6. Status of employment in pre pandemic period
7. Status of employment in post pandemic period
8. Movement of index of stock market in pandemic period

ABSTRACT

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The COVID-19 outbreak, which started in China in December 2019, has spread to 203 countries.
Till date, over 1.5 million people had been affected by COVID-19 and about 80,000 people had
died worldwide. We are in unprecedented times. The Covid-19 pandemic is spreading across
the world and India is no exception.

With the cases also rising exponentially in India, the Government introduced a 21-day national
lockdown in first phase . The Indian economy is going through a major slowdown with COVID-
19 coming into the picture, which was evident over the recent quarters even before the crisis
hit. The economy expanded at a six-year low rate of 4.7 per cent in the third quarter of the
current financial year.

The outbreak has now presented Indian economy with new roadblocks, creating destructive
impact on the world of work. The organizations have gone on a back foot with such a crisis at
the country. The impact of COVID-19 would be felt across sectors such as logistics, auto,
tourism, metals, drugs and pharmaceuticals, electronic goods, MSMEs and retail among others.
However, the extent of actual impact would depend on the severity and duration of the
outbreak, which is still unknown. The government and various regulators have announced a
series of measures to support corporates and individuals during the lockdown.

This dissertation spotlights the impacts of COVID-19 on Indian economy sector-wise and
discussed the various challenges Indian economy may face in coming time. It presents the so far
impact made by the Covid-19 pandemic on the economy and how markets and the economy
have reacted sharply to the pandemic and its implications for businesses. The relevant data
have been taken up from various reports of authentic agencies, journals, newspapers and
websites. The dissertation concludes and gives clear picture of the overall impacts of Covid-19
pandemic on Indian economy.

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 CHAPTER 1

INTRODUCTION

BACKGROUND

The outbreak of the novel coronavirus disease (COVID-19) in late 2019 has brought
unprecedented challenges to economies worldwide, and the Indian economy is no exception. As
one of the world's largest economies and a significant player in the global market, India has
experienced significant disruptions and economic shocks as a result of the pandemic. The
COVID-19 crisis has led to a series of events, including nationwide lockdowns, supply chain
disruptions, reduced consumer spending, and business closures, all of which have had far-
reaching consequences for various sectors and economic indicators. Understanding the impact of
COVID-19 on the Indian economy is crucial to develop effective policies, strategies, and
recovery plans.

Honorable Prime Minister Narendra Modi announced as ‘Janta Curfew’ on 22nd March, Sunday,
followed by a complete 21 day lock down from 24th of March across India and requested all to
remain socially distant. He spoke about people that come from outside or other nations being left
isolated or in quarantine. Realizing no fall in the death rate, the lock down got extended till 3rd
of May. Just a little over one-fourth (27.7 per cent) of the overall working age population (15-59
years) of 1003 million, or 285 million jobs, worked after the lockdown in a few days (the last
number before lockdown was 44 million, according to the Center for Monitoring the Indian
Economy (CMIE report). This shows that within the two-week period of lockdown, 119 million
workers have lost their jobs. If we presume that one-half (60 million homes or 300 million
people) of India's households, on the basis of the census of 2011, are a family members with an
average family size of five households, it may face a severe survival problem and about 227
million households are badly affected. The CMIE study reveals that employment has declined
dramatically and unemployment has risen significantly in March 2020. In March 2020, the
unemployment rate stood at 8.7%, just above the projected state unemployment level for 2017-
18 at a height of 45 years of 6.1%. After September 2016, this is the largest unemployment rate.
The unemployed people have also gone up from 32 million to 38 million during the same period.

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The situation became further worse as we moved into the lockdown period in the last week of
March and the unemployment rate soared to 23.8%.

Such projections, though, simply reflect the effect on employment during the lock-in era and
cannot be viewed as a complete lack of livelihood. After the lockout is over, several of them
would return to work. Nevertheless, it is clear that many of them, such as migrant employees
who engage in seasonal or contract jobs and many who have moved to their communities, do not
come home. The five major impacted industries in urban areas are the manufacturing (28
million), retail, hotel and restaurants (32 million), building (15 million), shipping, storage and
communications (11 million) and banking, enterprise and real estate (7 million). This sector is
influenced by approximately 93 million informal staff. 50% of the 93 million unpaid employees
operating in these sectors are self-employed, 20% are seasonal day-to-day wage jobs, and 30%
are wage and contract employees without any network of social security. Casual employees are
considered the most disadvantaged in the building industry because of the irregularity of their
jobs and the lowest average wage earned. Therefore, some frequent staff, those who are currently
not in service, skilled workers and small shopkeepers who may sit idle at home or come back to
their homes or remain in the lodgings will not be able to rebound from the lockout time.

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 CHAPTER 2

LITERATURE REVIEW

1. S. Mahendra Dev and Rajeswari Sengupta (2020) in their research paper, ‘Covid-19:
Impact on the Indian Economy’, analysed the impact of Covid-19 on Indian economy.
They find that GDP growth had slowed down to 4.2 percent in 2019-20. This is the
lowest level since 2002-03. Industry, which comprises 30 percent of total GDP,
contracted by 0.58 percent in the fourth quarter of 2019-20. Unemployment rate has
reached the highest level of the last 45-years. The total outstanding investment projects
between 2015-16 and 2019-20 have declined by 2.4 percent, while new projects
announced declined by 4 percent.[25] Expenditure on consumption had also fallen for
the first time in several decades. So, Indian economy was already in a critical position
before Covid-19, and Covid-19 made the situation worse.

2. Monika Chaudhary et al. (2020) in ‘Effect of COVID-19 on Economy in India: Some

Reflections for Policy and Programme’ predicted that MSMEs would undergo a severe
cash crunch. They emphasise on inclusive growth and development in India and also
exposed the problem of supply chain risks which we had seen during and after the
lockdown. According to them, the global firms had left themselves dangerously exposed
to supply chain risks to bring down costs. These global industry depends on ‘Just in
Time’, refurbishment of products and maintain very low inventories. They concluded
that economic activity must begin gradually after screening of the labour force and strict
preventive measures should be implemented by the industry in order to safeguard the
health of the workers. Policy and reforms should be led by the government to recoup
the economy, and the industry, civil societies and communities have an equal role in it.
They also emphasized on compliance with the norms of social distancing and preventive
measures to fight against the virus.

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3. Abel Brodeur et al. (2020), in ‘A Literature Review of the Economics of Covid-19’ had
reviewed various research work done on covid-19 and its impact on various aspects of
life, health, environment, society, economy, culture, industry, business, etc. Though, the
study was related to research paper written in a short span of time, it was significant as
it covers views and findings of various researchers who tried to make use of research
method to combat the crisis engendered by this deadly disease. This may be helpful to
find many solutions to the problems caused by the virus.

4. Dr. Kiran Kumar and Prashant Kurber in their research paper – Impact of COVID 19 on
sales: a study on E- Commerce industry, describes various factors affecting e commerce.
Impact of Covid on sales, start ups and demographics etc. helps in analyzing the impact
of Covid 19 on Ecommerce sector in India.

5. Divya Bharti and Dr. GP Dinesh in their research work – Impact of Covid 19 pandemic on
Indian Service Sector, analyses the impact of pandemic on various parts of service sector
like aviation, tourism, hotels, IT etc. What’s their condition pre and post covid period .
Stating the most affected sector among them and the extent to which they got affected.

6. Pravakar Sahoo and Ashwani in their research journal , COVID 19 AND INDIAN
ECONOMY – describes the impact of pandemic on growth , manufacturing , trade and
MSME sector. They describe the impact of pandemic in four different scenarios dividing
the whole period in four phases and then anlaysing the impact in those scenarios.

7. Shihul Xiang , Saad Rasool , Yong Hang , Kamran Javid in their combined work – THE
EFFECT OF COVID 19 ON SERVICE SECTRO SUSTAINIABILITY ,have shown the covid
impact on Food Retail, Healthcare Sector and Education sector. This research work gave
a great insight into the problem and provided helpful data regarding the dissertation.

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 8. Vikas Barbate , Rajesh N. Gade and Shirish S Raibagkar, in their work COVID 19 AND ITS
IMPACT ON THE INDIAN ECONOMY assess the impact of pandemic on five indicators and
they are unemployment rate, GDP growth rate , Industrial Output, interest rate,
inflation rate. They used a projection model to make projections of growth for further
years of recovery.

9. Kishore Kumar Das and Swati Dhingra worked upon the research work on the topic
Impact of Covid 19 On Indian GDP and showcases the change in gdp growth rate and the
factors responsible for them.

10. Sunita L Thakkar research work, Impact of Covid 19 on Indian Economy describes the
sector wise impact of pandemic in India. They make analysis through data and
concluded that agricultural sector is not that much affected whereas industrial ,service
and informal sector are worst affected.

11. Rajesh Kumar Sinha , research Jorunal on IMPACT OF COVID19 ON INDIAN ECONOMY
AND SOCIETY, describes the worsening of socio economic inequalities in India due to
pandemic. Inequalities in terms of income, employment opportunities, healthcare
access , education facilities have been talked about in this research work that how this
problems got worsened due to covid.

RESEARCH GAP:

The above literature, presents a good picture of impact of COVID19 on Indian economy. But all
they do not give inclusive data interpretation. Many aspects have been missed by them we have
been covered in this dissertation.

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 PROBLEM STATEMENT

The problem statement is:

“IMPACT OF COVID 19 ON INDIAN ECONOMY (SECTORAL ANALYSIS)”

RESEARCH OBJECTIVES

The research objectives of studying the impact of Covid-19 on Indian economy are as follows-

1. To study the impact of Covid-19 on Indian Economy.

2. To study the impact of Covid-19 on various sectors of economy.

3. To analyze the effects of the pandemic on employment and labor market dynamics in

India, including changes in unemployment rates, income disparities, and shifts in

employment patterns.

4. To analyze the effectiveness of government policies and measure implemented to manage

the economic impact of the pandemic.

5. To study the short term and long term recommendations for different sectors.

6. To assess the social economic inequalities caused by Covid-19 in Indian Economy.

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 RESEARCH METHODOLOGY

DATA COLLECTION –

This study will include secondary data from PRESS INFORMATION BUREAU, MINISTRY

OF STATISTICS AND POLICY IMPLEMENTATION, RESERVE BANK OF INDIA,

ECONOMIC SURVEY – GOVERNMENT OF INDIA, and Various Research Journals that have

been referred above.

RESEARCH TYPE –

This research is descriptive in nature which is relevant in an inquisitive study as it requires

impact analysis.

TYPE OF DATA –

Secondary Data.

DATA ANALYSIS TOOL-

After collecting the relevant data, the relevant data is converted into tabular forms . After that I

have made some charts from that data to infer the trend and impact of COVID 19 on Indian

Economy.

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 CHAPTER 3

ANALYSIS AND INTERPRETATION

IMPACT OF COVID 19 ON INDIAN ECONOMY

To stop the critical spread of Covid-19 pandemic, the government of India has imposed

countrywide lockdown in India. Social distancing, restriction on mobility of people, closures of

non-essential commodities etc. measures have been taken. In such situation almost all economic

activities were stopped. The demand-supply chain has become instable. To be back in the routine

life, the economy will take some time. Three core sectors of the economy were impacted

tremendously.

TABLE 1: This table shows the growth in different sectors of Indian economy in percent from

year 2016-17 to 2020-21.

SOURCE: Reserve Bank of INDIA

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CHART 1.

This charts explains the growth rate of agriculture, industrial and service sector from 2016-17 to

2020-21. From the graph its quite evident that agriculture growth though declined but never

became negative whereas Industrial growth rate negatively declined in pandemic and services

sector decline and became negative in 2020-21.

Now if we calculate the GROSS VALUE ADDED of the economy from the GVA of different

sectors through finding out the average. So we can actually determine the GVA of whole Indian

economy over these years.

TABLE 2: This table shows the GVA of economy from averaging GVA of different sectors .

YEAR 2016-17 2017-18 2018-19 2019-20 2020-21

GVA 8.0 6.2 5.9 4.1 -6.5

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CHART 2:

This is a graphical representation of the above table showing GVA of Indian Economy. This also

shows that GVA of different sectors have a significant impact on overall GVA of the economy.

Due to pandemic GVA of all main three sectors declined which resulted in overall decline in

total GVA of Indian Economy.

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 SECTOR-WISE IMPACT OF COVID 19

AGRICULTURAL SECTOR

Agricultural and allied sector is one the pivotal sector in India contributing about 1/6 th income to

GDP. It had functioned smoothly during the covid period. Though there were disruptions in way

of price rise of food crops, declining wages and lost jobs , disrupted food markets leading to

changes consumption pattern of consumers But Government of India has taken all necessary

measures through market reforms and social safety nets to ensure smooth operation of

agriculture related activities. Farming and allied activities were exempted from the lockdown.

Seed, pesticide, fertilizer etc. dealers / shops and other input related activities were allowed to

open / free for making inputs available to the farmers. Inter and intra state movement of farm

machinery specially combine harvesters was facilitated. As a result of the various steps taken by

the Department, both harvesting activities of the Rabi Crop and sowing activities of Summer

Crop took place in a systematic manner. However, no income assessment report which estimates

the impact of Covid on the income of small and marginal farmers due to nation-wide lockdown

is available. Agriculture and Allied Sectors registered a growth of 3.4% during 2020-21 even as

the overall economic growth declined by -7.2% during the same period. Growth rate of

Agriculture and Allied sectors during the last 6 years are given below which is averaged at

4.45% growth.

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Table 3. This table shows the growth rate of Agricultural sector in India over pandemic period.

YEAR GROWTH RATE (%)

2016-17 6.8

2017-18 6.6

2018-19 2.6

2019-20 4.3

2020-21 3.4

2021-22 3

SOURCE: MoSPI

Chart 3.

The adverse impact of Covid-19 on agriculture has been much less as compared to

manufacturing and services. However the initial lockdown did affect agricultural activities and

the necessary supply chains through several channels: input distribution, harvesting,

procurement, transport hurdles, marketing and processing. Closure of restaurants, transport

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bottlenecks etc reduced the demand for fresh produce, poultry and fisheries products, affecting

producers and suppliers. A study by Narayanan (2020) indicates that when the initial lockdown

was imposed in March, farmers were stuck with harvest as APMC (agricultural product market

committee) mandis closed in several states thereby disrupting food supply disruption from the

production to the consumption centres. Some state governments have already taken initiatives.

Since supply chains have not been working properly, vast amounts of food started getting wasted

leading to massive losses for Indian farmers.

MANUFACTURING SECTOR

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The first wave of COVID-19 outbreak resulted in shutting down an extensive number of sectors,
including manufacturing, services, retail and tourism. Manufacturing sector in india contributes
approximately 20% to the GDP and was already suffering long before the pandemic. The impact
of the pandemic on the indian economy is huge across sectors in various scenarios of complete,
partial, lockdown and at various levels of capacity utilization.

During the first wave of the pandemic, lockdown-imposed restrictions on the movement of goods
and people severely impacted workforce capacity and disrupted supply chains, bringing nearly
all manufacturing activity to a stand-still.

The key issues impacting the manufacturing sector are listed in the image below:

1. Supply chain disruption

2. Capacity underutilization
3. Labour shortage
4. Weaker demand
5. Special regulatory restrictions
6. Liquidity crunch

The manufacturing industry was affected in several ways due to the pandemic leading to low-
scale operations, and eventually, a negative impact on production volumes. Over a period, this
adversely affected the turnover and revenue.

The IIP also fell to a negative growth of 9.6% indicating that core manufacturing activity also
suffered setbacks resulting from the first and the second wave.

Table 4. This table and graph shows the IIP index of manufacturing sector of India

YEAR INDEX ANNUAL GROWTH

2018-19 3.9

2019-20 -1.4 -240

2020-21 -9.6 -1060

2021-22 3.1 210

SOURCE: STATISTA

.Chart 4.

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This graph depicts the industrial production index from year 2018-19 to 2021-22.

Its quite visible that this index touches negative level in 2019-20 and declined further in year
2020-21.

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 SERVICE SECTOR

Service sector contributes over 50 percent to Indian GDP. While COVID 19 pandemic has had
an inverse impact on most sectors of the economy, the service sector has been the badly affected
as its share declined from 55% to 53% from 2019-20 to 2021-22. Within the service sectors, the
effect of pandemic varies. While noncontact services such as information, communication,
financial, professional, and business services have remained resilient, the impact has been much
severe on contact based services such as tourism, retail trade, hotel, entertainment and recreation.

A. Trade

According to a UN report for India the trade impact of the coronavirus epidemic for India is
estimated to be about 348 million dollars with the worst hit chemicals sector (129 million
dollars), followed by textiles and apparel ( $64 million), automotive sector ( $34 million),
electrical machinery ( $12 million), leather products ($13 million), metals and metal products
($27 million) and wood products and furniture ( $15 million). In the recent years, there has not
been much growth in our exports. During FY20, India’s exports contracted 4.8% to $314.3
billion while imports shrank 9.1% to $467.2 billion. The severity of impact can be seen through
the fact that 29 of 30 items each in export and import baskets contract. Now due to pandemic and
resultant lockdown there may not be buyers for our products in the international market.
Moreover, countries all over the world are adopting protectionist measures. It is going to be
tougher for India because we are dependent on agriculture and intermediate exports and supply
chain disruption, demand shock and the looming recession are bound to impact trade even
further. The worst affected entity is MSME sector. Due to lockdown, production is halted and
laborers employed in MSMEs are moving to their native lands. According to CII, the MSME
sector add 13-15 million jobs annually. This sector is a key component of the Indian economy
but Indian MSMEs are too small to sail through a pandemic like COVID-19. Moreover, on the
one hand government has asked MSMEs to shut down their operations and on the other hand
they have to pay employees, apart from meeting costs for taxes, power, and other utilities. It is
not sustainable and will lead to layoffs. The layoffs will result in lower demand pushing
companies out of business. So if demand from international market revives in near future it will
be very unlikely for India to cater

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B. Hotels and Restaurants

The imposition of section 144 has led to cancellation of corporate events, conferences and even
weddings and family gatherings. The lockdown has left most of the hotels struggling with near
record low occupancies. Many hotels have offered their rooms to healthcare professional or for
quarantine at subsidised rates or for free out of social responsibility but how long they will be
able to continue them is a major concern. There are very low chances that foreign tourists will
come and ban on international travel will be lifted in coming months. According to the report by
CII, Hotels across all over India were negatively affected in key performance indicators i.e.
occupancy, ADR and RevPAR. The overall occupancy in the branded hotels segment in 2020 is
estimated to decline by 16.7 - 20.5 percentage points over 2019, while ADRs are estimated to
decline by 7% to 8% for the year. As a result, RevPAR will witness a significant decline of 31%
to 36.2%. Therefore, the overall revenue of the Indian hotel sector is set to decline by anywhere
between US$ 8.85 billion to US$ 10 billion.

C. Transport

All modes of public transport are suffering due to lockdown. From rickshaw pullers to airlines,
all have been affected economically by the pandemic. Whereas the loss of Indian railways is of
the amount 12500 crore grounding of domestic and international flights is expected to result in
Loss as high as 3-3.5 Billion US dollar. For all State Transports the fixed cost has increased and
revenues have almost been zero It will add to the economic suffering of the drivers in the wake
of reduced demand resulting from COVID-19. According to ICRA COVID-19 is expected to
impact transportation infrastructure as transportation infrastructure has a strong correlation with
the health of the economy and thereby with the movement in GDP. Therefore, the detrimental
impact of Covid-19 on the overall economy would in turn affect the movement of freight on the
road stretches and the air traffic.

D. Telecommunications

Telecommunication is the only sector with minimum losses and driven up demand during
COVID-19. There has been higher dependency on digital tools such as videoconferencing,
collaborative applications etc. The MHA guidelines provided for telecommunications, internet
services, broadcasting and cable services, IT and IT-enabled services (ITeS) as essential services,

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which not only ensured the continuity of service but also eased the movement of employees
working in telecommunication sector. During the lockdown the overall traffic has jumped by
10% and streaming platforms have witnessed a 20% spike.

E. Real Estate

Real estate contributed nearly 6% to India’s GDP in 2017.The sector creates tremendous
opportunities for the skilled and unskilled workforce. migrant workers comprise at least 80 per
cent share of the total 44 million workforces in the construction sector. However, due to COVID-
19 when all the construction work is stopped millions of workers have migrated to their
hometowns due to lack of work. Some reports indicate that 300,000 workers have already been
laid off by developers across India due to the ongoing slowdown. Moreover, as per an April 2020
KPMG report – Potential impact of COVID-19 on the Indian economy – the real estate industry
will witness an estimated job loss of around 30%.

F. IT Services

Due to COVID-19 Indian IT Services industry the sector is expected to grow at 3-5% in earlier
expectation of 6-8% (ICRA).The major reason for this is that 80% of IT Services export
revenues generate from US and the Eurozone. The GDP growth fall of US and Euro zones from
2.3% and 1.2% in CY2019e to 1.5% and 0.7% respectively in CY2020 (Source: Moody’s
Investor Services) will impact IT services export revenue. Moreover, the travel restrictions to
developed countries has impacted movement of IT professionals. The IT offices are either closed
or employees are working from home which, has delayed the new commissioned as well as the
projects in pipeline.

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Chart 5.

SOURCE: ECONOMIC SURVEY 2021

This chart shows the estimated impact from the coronavirus on the service sector in India
from 2nd quarter 2020 to 3rd quarter 2021. There is negative trend in growth rate of parts
of financial services till the 4th quarter of 2020. From 2nd quarter 2021 the sector starts
recovering from the pandemic and starts making positive growth.

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 INFORMAL SECTOR

India has a very high share of informal employment in total employment. The share, which
includes agricultural workers has declined marginally from 94% to 91% in last 12 years. Out of a
total of 465 million workers, 422 million were informal workers in 2017-18. Even in the non
farm sector this rounds upto 84% in the same year.

The informal workers were already facing problems with low wages and incomes in pre covid
era. The pandemic has affected all levels of society but informal sector was worst affected. With
almost no economic activity particularly in urban areas the lockdown has led to large scale losses
of jobs and income for these workers. There was loss of 122 million jobs in april 2020. Out of
that the small traders and daily wages labourers lost 91 million jobs as per CMIE. The
employment rate was 39.1% on 22nd March 2020 which declined to 26.4% on 3rd May 2020.
Although there has been improvement in employment rate, it has not reached the pre covid
period. A survey shows that 57% of rural workers and 80% urban workers lost work during
lockdown. Around 77% of the households consumed less food than before.

Table 5. shows the status of employment of informal workers across sectors Pre and Post
Lockdown. This is evident from the table that the working population decreased on the large
extent in the given four sectors in post lockdown period and unemployed population have
increased .

SOURCE: MoSPI

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CHART 6: PRE-PANDEMIC PERIOD

CHART 7: POST PANDEMIC PERIOD

Most of these migrants continue to be out of work as business and establishments have shut
down or because it is not easy for them to return back to urban areas having gone through one
round of extreme hardships. In the absence of money, jobs,and any food , savings or shelter in
larger cities they migrated to rural areas.

Some of the migrants have returned to urban areas after relaxation of the lockdown but many of
them are still in rural areas. These workers are looking for jobs in rural areas. Even the skilled
and non skilled are working in the works of MNREGA.

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 HEALTHCARE SECTOR

The novel coronavirus of 2019 struck the world and created havoc with its rapid spread. Various
countries got affected in terms of economic and other losses and the extent of impact depended
on the pre existing financial arrangement of the country and various other factors. Due to this
outbreak, healthcare sector was one of the worst affected. Also it needed most investment and
had to respond quickly and effectively to manage this crisis. Among the countries affected, India
a financial center with significant worldwide connectivity was impacted directly leading to an
imminent breakdown of economic markets.

IMPACT OF COVID 19 ON HEALTH SECTOR-

 COST TO HEALTH SYSTEM:

The pandemic came as an unprecedented shock to the already parlous Indian economy. A
large population, variations in resources across regions and a weak public health system
in India posed a challenge in terms of time and preparedness to deal with an accelerating
cases. In terms of available funding, from the 3.6% GDP investment in healthcare, only
1.5% is by the government, and more than 2% is borne by households, that is 65%
expenditure is out of pocket. The system in place when COVID struck was thus
underprepared to deal with this emergency. Also the extra costs in terms of procurement
cost of sanitizers and medicines from pharmaceutical sector increased.
 HEALTH SYSTEM FUNDING AND FISCAL IMPLICATIONS:
The increasing demand on health facilities and health care workers would overstretch
health systems leading them to operate less effectively. Covid 19 thus called for the the
government to introduce financial packages for infrastructure improvement, procuring a
greater number of testing kits and labs as shortages in medical supplies and inability to
provide adequate testing were the major issues faced by the indian economy. A stimulus
package at 0.8% of GDP was announced on 26th march 2020 and included in kind and
cash transfer to lower income households, insurance coverage of healthcare workers and
financial support to low wage workers.
India was initially equipped only with 111 COVID19 testing centers and around 60000
beds in government run quarantine facilities leading to patients depending on

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 understaffed and underfunded treatment to which Central Govt. announced a package of
15000 crore rupees as emergency fund.
 ALLOCATION OF HEALTHCARE RESOURCES:
The 15000 crore budget addressed emergency and long term measures. Emergency
response included building up testing facilties and PPF , development of Covid 19
dedicated treatment facilities , centralized procurement of essential medical equipment
and required drugs, training of medical manpower. Long term measures included
strengthening and building resilient national and state health system.
 INSURANCE:
During COVID19 health insurance is facing higher hazards and as per government orders
the Covid testing expenses covered by state government existing health insurance
policies are asked to extend to cover corona as well. For below poverty line case
COVID19 positive individuals were to be covered under ayushman bharat health
insurance scheme
A rise was seen in beneficiaries as purchasing of online health insurance schemes shot up
by 30% and offline schemes saw fallout.
 IMPOVERISHING HEALTH STATUS AND VULNERABLE GROUPS:
The risk of severe complications from COVID19 is higher for certain vulnerable
populations, particularly people who are elderly, frail, or have multiple chronic
conditions. The other vulnerable group is formed by the stranded, poor, daily workers as
the ever increasing health cost keeps pushing those just above the poverty line back into
poverty. Migrant workers were one such major group in India.
Excessive reliance on out of pocket payments lead to financial barriers for the less well
off, and increased inequalities in access to health care, causing financial catastrophe and
impoverishment, estimates shows that worldwide each year 100 million individual are
impoverished and 150 million face severe financial difficulties due to direct health
expenditure and that 90% of these people live in low income group.

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 EDUCATION SECTOR

Every industry in the globe is seeing the effects of the COVID 19 pandemic. This has a
significant negative impact on both the indian and global education systems. The education
sector has been working to survive the crises with a new strategy and digitizing the difficulties to
remove the pandemic threat.

NEGATIVE IMPACT OF COVID 19 ON E-EDUCATION :-

1. Education activity got hampered. Classes got suspended and exams got postponed.
Admission tests delayed and academic years shifted by 3 months.
2. Most of the recruitment got postponed due to COVID19 ; placements for students also
affected with companies.
3. Many have no access to digital world. A lot of students may not be able to afford digital
devices required for digital classes and thus affecting their education.
4. There erupted a tendency of casual approach in learning process and
Non-seriousness towards studies.

POSITIVE IMPACT OF COVID 19 ON E-EDUCATION:-

1. E education is trying to make youths more digitalized and technology prone. It will
further help them to be more and highly skilled in technology.
2. COVID19 has accelerated adoption of digital technologies to deliver education.
Educational institutions moves towards blended mode of learning.
3. It created a large pool of learners at a time.
4. Enhanced digital literacy.

30
 FINANCIAL SECTOR

The financial sector of The India is divided into several sub parts like Indian financial market or
capital market, banking sector, insurance sector etc. Here in this study we’ll assess the impact of
COVID 19 on Indian Financial market and Banking sector.

INDIAN FINANCIAL MARKET

Before COVID-19, trade funding on each vital interchange in India was about $2.16 trillion.8-10
stocks within the large caps was available for stock market rally, 2019 The Sensex Payback
was approx 14% (excluding dividends) in 2019 but apparently spotlight two- handed
companies such as HDFC Bank, HDFC, TCS, Infosys, Reliance, Hindustan Unilever, ICICI
Bank and Kotak Bank, without which Sensex returns would have been negative.

Comparison of Pre and Post COVID View: Indian Stock Markets

Ever since COVID 19 strike, markets have loomed under fear as uncertainty prevails, Following
the strong correlation with the trends and indices of the global market as BSE Sensex and Nifty
50 fell by 38 per cent. The total market cap lost a staggering 27.31% from the start of the year.
The stock market has considered the opinion this pandemic release upon investors, foreign and
domestic alike. While the world has noticed numerous monetary catastrophes in the past, the last
one being the world slowdown of 2008, the present coronavirus crisis is different from the
previous experiences.In response to current turbulence, RBI and the Government of India has
come up with reforms such as depletion of repo rate, managerial composure by enlarging
moratorium and several measures to boost liquidity in the system however the pandemic has
impacted the premise of the corporate sector. Companies have curtail: redundancy have
accumulated and laborers repayment have been affected proceeding in minor growth in the
last few of months. Certain sections such as hospitality, tourism and entertainment have been hit
resentfully and stocks of such companies have plummeted by 40%.

31
CHART 8:

This figure shows the movement of the index during the onset of the pandemic. It exhibits that
the market fell by about 15–17% in March during the onset of the pandemic in India. The month
of April was relatively better as the market tried to recover from the lows of March and showed
an upward trend.

32
 STEPS TAKEN BY GOVERNMENT TO AMELIORATE IMPACT OF
COVID-19 PANDEMIC ON INDIAN ECONOMY

Giving more details about the schemes launched by the Government, the Minister said that the
Government announced a special economic and comprehensive package under AtmaNirbhar
Bharat including measures taken by RBI amounting to about Rs. 27.1 lakh crore – more than 13
per cent of India’s GDP– to combat the impact of the COVID-19 pandemic and to revive
economic growth. The package included, among others, in kind and cash transfer relief measures
for households, employment provision measures under Pradhan Mantri Garib Kalyan Rojgar
Abhiyaan and increased allocation under MGNREGS, credit guarantee and equity infusion-based
relief measures for MSMEs and NBFCs and regulatory and compliance measures. Structural
reforms were also announced as part of the AtmaNirbhar Bharat Package which, inter alia,
included deregulation of the agricultural sector, change in definition of MSMEs, new PSU
policy, commercialization of coal mining, higher FDI limits in defence and space sector,
development of Industrial Land/ Land Bank and Industrial Information System, revamp of
Viability Gap Funding scheme for social infrastructure, new power tariff policy and
incentivizing States to undertake sector reforms. The implementation of the package is reviewed
and monitored regularly. Some of the salient achievements include:

 lUnder Pradhan Mantri Garib Kalyan Package valued at Rs. 2.76 lakh crore, free food
grain for 80 crore people, free cooking gas for 8 crore families, and direct cash transfer
to over 40 crore farmers, women,elderly, the poor and the needy were provided.
 As on 3rd February, 2021, a total of 323.19 crore person-days have been generated in the
current FY 2020-21 under MGNREGS.
l

 Under Pradhan Mantri Garib Kalyan Rojgar Abhiyan, 50.78 crore person-days of
employment was generated incurring an expenditure of Rs. 39,293 crore.Rs. 3 lakh crore
Collateral-free Automatic Loans for Businesses, including MSMEs: Under Emergencyn
Credit Line Guarantee Scheme (ECLGS) 1.0, Rs. 2.14 lakh crore has been sanctioned to
90.57 lakh borrowers of which Rs 1.65 lakh crore has been disbursed to 42.46 lakh
borrowers as on 8th January, 2021. Additionally, ECLGS has been extended to 26
stressed sectors identified by the Kamath Committee and the healthcare sector till March,
2021 with operational guidelines issued on 26th November for maintaining the
momentum of credit disbursements to close to 45 lakh business units. As on 8th January
2021, additional credit amounting to Rs. 15,571 crore has been sanctioned to 2,772
borrowers under ECLGS 2.0, of which Rs. 3,344 crore has been disbursed to 1,188
borrowers.
l

 Rs. 45,000 crore Partial Credit Guarantee Scheme 2.0 for NBFCs are being provided.
Purchase of portfolio of Rs. 27,794 crore has been approved by PSBs and Rs. 1400 crore
are currently in process of approval/negotiations as on 4th December, 2020.
l

 Rs. 30,000 crore Additional Emergency Working Capital Funding for farmers through
NABARD isbeing provided. Rs. 25,000 crore has been disbursed so far as on 4th
December, 2020.
 Under balance Rs.5000 crore Special Liquidity Facility for smaller NBFCs and MFIs, Rs.
130 crore has been disbursed as on 4th December, 2020.
l

33
  Centre had enhanced the borrowing limit for the States from 3% to 5% of GSDP for
FY2020-21. Under the Special Window provided by Central Government to borrow the
shortfall arising out of GST implementation on behalf of States, Government of India
has borrowed an amount of Rs. 78,000 crores in 13 instalments, at an average interest
rate of 4.75 per cent, and passed it on to the States and UTs as on 25th January, 2021.
l

 l Rs. 50,000 crore liquidity through TDS/TCS rate reduction has been effected.

Union Budget 2021-22 has also announced a number of measures to support broad-based and
inclusive economic development under six pillars listed as under:

i. Health and Wellbeing

Key measures include a holistic approach to strengthen healthcare with focus on three areas-
Preventive, Curative, and Wellbeing, Rs. 35,000 crore for COVID-19 vaccine, roll out of Made-
in-India Pneumococcal Vaccine across the country, launching of a new centrally sponsored
scheme PM AtmaNirbhar Swasth Bharat Yojana in addition to National Health Mission, Mission
Poshan 2.0, Universal Coverage of Water Supply, Urban Swachh Bharat Mission 2.0, Clean Air,
Scrapping policy, etc.

ii. Physical & Financial Capital, and Infrastructure

Key measures include Production Linked Incentive scheme (PLI) in 13 Sectors, Mega
Investment Textiles Parks (MITRA), 7 Textile Parks, expansion of National Infrastructure
Pipeline (NIP) to 7,400 projects, creation of institutional structures for Infrastructure Financing,
National Monetization Pipeline, sharp increase in Capital Budget, economic corridors, flagship
corridors/expressways, National Rail Plan for India (2030), future dedicated freight corridor
projects, strengthening of urban infrastructure, launching of National Hydrogen Energy Mission
2021-22, extension of Ujjwala Scheme to cover 1 crore more beneficiaries, development of a
world class Fin-Tech hub, increasing FDI limit in insurance sector from 49 percent to 74 percent,
setting up of Asset Reconstruction Company Limited and Asset Management Company,
recapitalization of PSBs easing compliance requirement of small companies.

iii. Inclusive Development for Aspirational India

Key measures include ensuring MSP at minimum 1.5 times the cost of production across all
commodities, extension of SWAMITVA Scheme to all States/UTs, enhancing agricultural credit
and infrastructure funds, investments to develop modern fishing harbours and fish landing
centres, One Nation One Ration Card, Rs. 15,700 crore budget allocation to MSME Sector, etc.

iv. Reinvigorating Human Capital

Key measures include qualitative strengthening of 15,000 schools under National Education
Policy, setting up of 100 new Sainik Schools, Higher Education Commission of India, Central
University in Leh, 750 Eklavya model residential schools in tribal areas, revamped Post Matric
Scholarship Scheme for welfare of SCs, measures to enhance skilling like realignment of
existing National Apprenticeship Training Scheme (NATS), etc.

v. Innovation and R&D

34
Key measures include Rs. 50,000 crore outlay under National Research Foundation (NRF), Rs.
1,500 crore for financial incentives to promote digital modes of payment, PSLV-CS51 launch,
Gaganyaan mission activities, launching of Deep Ocean Mission, etc.

vi. Minimum Government and Maximum Governance

Key measures include reforms to rationalize the functioning of Tribunals, National Commission
for Allied Healthcare Professionals Bill in Parliament to ensure transparent and efficient
regulation of the 56 allied healthcare professions, National Nursing and Midwifery Commission
Bill to bring transparency, efficiency and governance reforms in the nursing profession, setting
up of a Conciliation Mechanism for quick resolution ofcontractual disputes, Rs. 3,768 crore for
India’s first digital census, Rs.1,000 crore for the welfare of tea
workers especially women and their children in Assam and West Bengal, etc

35
 CHAPTER 4

FINDINGS AND CONCLUSION

COVID 19 has posed an unprecedented challenge for India. The precarious situation of the
economy, especially of the financial sector in the pre covid period, and the economy’s
dependence on informal labour, lockdowns, and social distancing measures are turning out to be
highly disruptive.

From the research work, we saw that GVA of the total economy declined and even fall
negatively in the pandemic period. This is so because of the declining GVA of the main sectors
of the economy.

In the agricultural sector we witness growth rate of 3.4% in 2020-21 from 4.3% which further
declined to 3% in 2021-22. Though growth rate falls but it did not falls significantly. This sector
functioned smoothly except a little rise in food crops prices, declining wages.

In the manufacturing sector IIP falls to 9.6% in 2021-22 indicating that core manufacturing
activity also suffered setback resulting from pandemic. There were supply chain disruptions,
capacity underutilization, etc.

COVID19 pandemic has had an inverse impact on most sectors of economy declined from 55%
to 53% from 2019-20 to 2020-21. In trade export contracted by 4.8% and imports by 9.1% in
FY20, whereas hotels and restaurants business declined by 16.7% to 20.5% ; whereas IT services
expected to grow at 3.5% because of exports.

COVID 19 also impacted the socio-economic inequalities in India. Like income inequalities due
to disruptions in informal sector or impoverishing health status of vulnerable groups.

Education sector is also seeing adverse impacts like recruitment getting postponed; poor sections
not getting E- education facilities.

Indian financial sector and banking sector also witnessed backlash in pandemic. Demand for
loans have decreased, complexities in digital banking, loss in incomes have worsely effected
banking sector and capital market.

36
The government of India has taken many steps to mitigate the impact of covid 19 pandemic on
Indian economy like Aatma Nirbhar Bharat; various emergency funds to different sectors.

The balance struck so far seems to be a reasonable one but the government needs to find a
greater scope for supporting the incomes of the poor. Involvement of the state and local
government may also be crucial in the effective implementation of further fiscal initiative.

37
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