Impact of COVID-19 on the Indian economy

November 19, 2021 0 Comments

The Covid-19 epidemic is one of the biggest disasters in pandemic history. The impact of the corona virus pandemic is very disturbing and has not spared anyone from its ill effects. There has been a major increase in death rates around the world. Not only are people losing their loved ones, they are also losing their jobs and source of income. The economic activities of more than 100 countries have been affected and some of the countries have even asked the IMF for monetary help.

Impact on the Indian economy:

India is a developing economy and after Prime Minister Narendra Modi announced a 21-day shutdown for the safety of the people, the country has seen high unemployment and economic depression. India has seen a large decline in government revenue and revenue growth as the new corona virus hits India’s economic activities as a whole. According to a recent study, the country has seen a job loss of 40 million people, mainly in the unorganized sectors.

Schools and universities have been closed; Sporting events like IPL are postponed, businesses around the world like entertainment, hospitality, aviation, restaurants, hotels, pubs, shopping malls, transportation and factories have also faced significant negative impacts in terms of their economy. Due to fear of the corona virus, people did not leave their homes even to buy the necessary daily items, all of these have contributed somewhere to affect the economy.

There has been a cut in global growth from 2.9% to 2.4%, and it may fall as low as 1.5% according to the Organization for Economic Cooperation and Development (OECD).

The blockade in India will have a major impact on the level of consumption, which is the main element of GDP. There will be a disruption in world trade and the supply chain that will mainly affect countries that are strong exporters and also countries that are importers.

  • India’s total electronic import is 45% of that of China. India imports about two-fifths of China’s organic chemicals and one-third of machinery, along with auto parts and fertilizers.

  • Furthermore, approximately 90% of mobiles and 65% to 70% of active pharmaceutical ingredients are imported from China to India.

A drop in world trade of up to 32% is expected in 2020 according to the World Trade Organization (WT0).

Sector impacts:

Laboral sector:

  • This sector is the most affected since most of the workers lost their jobs since most of them were engaged in construction companies and were daily wage jobs.

  • The quarantine and travel restrictions have left Indian factories without a workforce.

  • The country has seen people move from urban areas to rural areas.

Restaurants:

  • According to the NRAI, which represents many restaurants, they have advised their restaurants to close. Also all restaurants, clubs, pubs and cafes have been closed in accordance with government orders. Also, orders on online food delivery platforms such as zomato and swiggy have seen a significant drop of around 60% during the pandemic.

Food and Agriculture:

  • This sector contributes mainly in GDP to the employment sector. The supply of agri-food products such as dairy products, edible oils and cereals will be greatly affected this year.

  • Agrochemical companies dealing with the import of raw materials and the export of finished products will also be affected.

  • The online food supermarket also suffers a great loss due to the lack of delivery vehicles.

  • There has been a significant loss in consumer demand for staples such as shellfish, grapes, and mangoes.

Online business:

  • This sector contributes 10% of India’s GDP and its main segments are healthcare, household and personal care products, and the food and beverage sector.

  • Due to fear of the corona virus, people are avoiding stocking essential staples such as rice, flour and lentils, so there is an increase in sales from consumer goods companies that saw it fall into trade due to the supply chain disruption.

MSME:

  • This sector contributes 305 to 35% of India’s GDP. Maharashtra, Tamil Nadu and Madhya Pradesh have the highest number of registered MSMEs according to a study estimated by AIMO, a quarter of more than 75 million are facing closure and if the closure continues for four weeks, it will affect the employment of 114 million persons. affecting GDP.

  • Apparel, consumer goods, and logistics have all faced a decline in business and the MSMEs involved are still operating but are likely to be isolated due to purchasing power and liquidity constraints.

  • Since most MSMEs rely on government loan financing, there has been relief as the RBI announced a three-month loan repayment and a reduction in the buyback rate.

Those mentioned above are some of the negative impacts that the corona virus has on the Indian economy. But this pandemic has taught us many things. Many multinational companies have now moved from physical platforms to online platforms. People have now started working from home. The digital world took a hit during this pandemic as people have now started using apps like PayTM, Google pays for payment instead of using cash. Schools and universities have now started operating online at Zoom Meetings, Google Meetings, and Google Classrooms. Students can now access their assignments online and can now take their exams online through various platforms. This crisis also highlighted the importance of investing in technologies such as cloud data, self-service capabilities, e-commerce, e-government, and cyber security.

This pandemic has also made us realize that we must never forget to appreciate what we have in our lives and we must never forget to thank God for the lives we have. At CSS Founder, our goal is to provide businesses with our world-class support, at a minimal fee. Our team of professionals aims to help companies grow despite the serious impact of the pandemic.

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