Affect of covid 19 on Indian economy
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The economic impact of the 2020 coronavirus pandemic in India has been largely disruptive. India's growth in the fourth quarter of the fiscal year 2020 went down to 3.1% according to the Ministry of Statistics. The Chief Economic Adviser to the Government of India said that this drop is mainly due to the coronavirus pandemic effect on the Indian economy. Notably India had also been witnessing a pre-pandemic slowdown, and according to the World Bank, the current pandemic has "magnified pre-existing risks to India's economic Outlook
The outbreak of Coronavirus disease 2019 (COVID-19), first identified in Wuhan, the capital of Hubei, China, in December 2019 and since then having spread globally, has been recognised as a pandemic by the World Health Organization (WHO) on 11 March 2020. India is widely affected by this pandemic. As on 29.04.2020, more than 31000 cases of Coronavirus have been confirmed in India with more than 1000 deaths.
Taking into consideration its severe intensity, seen in the context of India having the highest rate of density population in the world, the Governments, both at Union and State levels, commenced necessary actions on war footing to prevent the spread of this pandemic. It was all the more so when it is known that this deadly disease has no medicinal cure.
The effect of Corona virus is badly felt and noticed in the world's most developed countries like USA, Britain and Germany etc. Obviously, India was bound to be affected not only because of its domestic slowdown but also because of international recession. Learning the lessons from the developed countries like Spain and Italy, India put all its machinery and material into motion to curb and/or prevent the disease. What started as one day Janta Curfew on 22.03.2020 by the Prime Minister of India and lockdowns by some of the state governments, the entire country was declared to be under lockdown from the midnight of 24.03.2020, and the same continues to be so till now or atleast till 03.05.2020, unless extended.
Resultantly, everything and every activity, barring the activities relating to and concerning with the essential supplies came to a complete grinding halt. Though the improvement in the environment due to such a lockdown was a silver lining, however the toll on economy due to this lockdown is too early to be estimated.
While presenting the Finance Bill for the year 2020-21, the Union Government on 01.02.2020 had reasonably estimated India's nominal GDP growth rate (i.e., real growth + inflation) of 10 percent, however, the same now seems far from reality and certainty. The slowdown in demand, closure of production activities, fall in the global price of crude oil, ban on foreign trade, price decrease in the commodities like energy, metals and fertilizers, restrictions on the aviation industry as also on tourism, amongst others, are bound to exert downward pressure on the inflation, thus adversely affecting the economy chart. It is believed that India's aggressive lockdown could bring the country's growth down to 2.5 percent from 4.5 percent it had earlier estimated. However, as per a statement released by Chief India Economist of Goldman Sachs on 09.04.2020, the economic growth of India has been estimated at a low figure of 1.6% only.
Overall uncertainty and lack of demand, coupled with no investment seen in near future, the Indian stock markets crashed. A UN report estimated a trade impact of more than USD 350 million on India due to this outbreak, making India one of the top worst affected economies across the world. During the same time, Asian Development Bank estimated the loss to Indian economy due to this outbreak upto USD 29.9 billion. The worst crash of Indian stock market by 2352.6 points on one single day on 12.03.2020 is a cause of concern for all the Indian economists and economic advisors. However, after the declaration of complete lockdown, Sensex and Nifty gained a little, adding a value of about USD 66 billion to investors' wealth. The trend however reveals that the curve has been meandrical with absolute uncertainty.
Corona virus had its impact in the industry in general, which has seen, not only cutting the salaries but also laying off its employees. The hotels are vacant and airlines have closed their wings. The live events industry has also estimated a loss of more than Rs. 3000 crores.