IMPACT OF CORONA VIRUS ON INDIAN ECONOMY

INTRODUCTION

 

The episode of Novel Coronavirus disease is a grave threat to the whole world affecting millions of individuals. Other than being inconvenient to human wellbeing, it also has negative repercussions on the worldwide business world bothering the whole economic framework and overturning exchange and trade. The upheaval of the sicknesses was first distinguished in Wuhan, China in December 2019. World Health Organizations (WHO) has been altogether checking and surveying its worldwide risks, consequently announcing it as a Public Health Emergency of global worry on 30th January 2020. The infection began spreading at a remarkable rate in various nations over the globe convincing WHO to broadcast it as pandemic on eleventh March 2020. Presently the entire world is grappling with this unseeable pernicious enemy. The vast majority of the nations are under lockdown and everything including typical life, social and financial conditions seems to be grinding to a halt.

In India, the first case of Covid infection was accounted for in Kerala on January 30, 2020. Numerous cases were then revealed in various urban communities in India. Henceforth, the Government of India made a fundamental move by reporting lockdown in every corner of the nation on 24th March 2020. The cities of Delhi, Mumbai, Ahmedabad, Kolkata, Chennai are thickly populated which has given rise to a spurt in cases of Coronavirus and these urban areas are the engines for development and improvement of the Indian economy. The pandemic has prompted financial disturbance, hindering the development of the whole economic climate. In this article, an attempt is made to identify the potential impacts of coronavirus on different sectors of the Indian economy and business.

 

IMPACT OF CORONAVIRUS ON DIFFERENT SECTORS OF THE INDIAN ECONOMY AND BUSINESS :

 

Covid-19 has set foot in India and is heading the nation to a major downturn. Coronavirus disease has become a world-changing event and is not only a humanitarian crisis but also an economic and social crisis. Its impact on the business environment is worldwide and manifold. Due to the rapid spread of coronavirus, several entities are bound to limit their business operations leading to disruption in the economic activities of several industries that drives growth. The setback that is being encountered by the different sectors of the economy is Highlighted below.

 

Primary Sector:

Primary sector encompasses industries associated with the extraction and production of raw materials. This sector employs about 43.21% of the population in India and contributes about 16.1% of the Indian GDP. It supplies raw materials to the secondary sector and furnishes the necessities of human life.

 

• Agricultural industry: In the agricultural sector, due to travel restrictions for lockdown, there has been a dearth of agricultural workers which has resulted in a drop in production. Also, the pandemic lockdown period coincides with the harvesting season of ‘Rabi’ crop, but owing to the paucity of laborers the crops unabatedly stay in the field. As the operations of the businesses like hotels, restaurants, sweet shops, and tea shops are suspended, the market of raw materials which are used for these purpose has gone down leading to grievances of farmers. There is a significant fall in revenue of the tea-based industries as they export a substantial part of their output which is now barred.

 

• Mining industry: The pandemic has curtailed the overall demand for metals and minerals which has trimmed down their prices. The mining entities have also experienced a drastic drop in their share prices.

 

Secondary sector:

 

The secondary sector provides employment to around 24.89% of the population in India and contributes about 29.6% of the Indian GDP. It embraces industries that produces and distributes finished goods or in indulged in construction activities, thus providing support to both the primary and service sector.

 

•  Manufacturing industries: Manufacturing industries are bearing the brunt of coronavirus as they had terminated their production at a short notice. The value of the inventories that are held up in the production centers or warehouse of these industries has gone down and the machinery is too lying idle for a long time. Major hindrances encountered by the industries are cash flow constraints and supply chain disruption.

 

•  Automobile industry: With almost all plants shut and imports being sealed up, there is a steep decline in production and sales of the automobile companies impelling them to declare pay cuts. The situation will be awful even during post lockdown period due to fall in income levels.

 

• Textile and Apparel industry: This industry is the workplace for over 45 million people in the country but temporary closure of production units has increased their hurdles leading to lay-offs. The termination of exports and imports harms the spinning mills in India as the exports of fabric, yarn and other materials have disrupted.

 

• Pharmaceutical and Chemical industries: These industries highly count on the import of bulk drugs and several raw materials from China. Due to import restrictions these industries are also impacted.

 

• Electronic industry: The finished products plus the raw materials used in this industry is mainly supplied by China. The spread of coronavirus has pushed down the production and sale of electronic goods and the supply chain is also interrupted.

 

• Solar power industry: Solar power project builders depend on Chinese imports. Around 80% of solar modules and solar cell used in India are from Chinese manufacturers. Thus, the Indian solar project developers started confronting shortage of raw materials and have limited stocks.

 

• Construction and engineering industries: For construction and engineering industries, the physical presence of a massive labor force is essential which is restrained during the lockdown and the construction activities have also halted. Thus the industries are tormenting at the hands of ruthless coronavirus.

 

Service sector:

About 31.9% of the Indian population is employed in the service sector which contributes about 54.3% of the Indian GDP.

 

• Tourism and hospitality industries: Tourism and hospitality are the foremost industries to be severely affected amid coronavirus crisis and will also be rearmost one to behold resumption of activities. Lockdown has averted the inflow of tourists dealing a crippling blow to the tourism and hospitality industries.

 

• Transportation segment: The pandemic has put down this segment under massive financial strain. Airlines, cruise, and road cargo operators have been struck hard because of border closure and travel restrictions. Some of the aviation companies are not even in the position to refund their customers those who had booked flights that were canceled due to lockdown.

 

• Healthcare segment: According to FICCI, healthcare segment is at the epicenter of these worldwide pandemic ordeal. Certain public hospitals have witnessed increase in demand in the crisis period. The private hospitals have arisen to the occasion by providing the government with all the succour it requires. 

 

• IT segment: IT segment is reeling under the coronavirus crisis as there is an immense dwindle in global deal activities as well as growth rate. They are downsizing their workforce to tussle with the present scenario.

 

• BFSI segment: Covid-19 has afflicted the BFSI segment by causing upheaval to their business and annual reporting giving rise to their nonperforming loans. During this emergency, the operational and technical difficulties faced by the employees as well as the customers spotlighted the lack of agility in the banking and financial system.

 

• Media and entertainment industry: Coronavirus has compelled to postpone release of several movies, shootings have come to rest and the theatres cannot screen movies bringing about heavy loss to this industry.

 

Ø Retail segment: shutting down of shops and malls that do not sell necessity goods have brought forth growth in revenue and considerable job loss. Retail stores selling essential commodities have witnessed the demand for the products exceeding supply engendering bare retail shelves.