How does Corona Virus Impact the Economy of India

The coronavirus outbreak has affected the Indian economy in many negative ways. It hit economic growth in the first few weeks of 2020. The outbreak brought all nations, including India, to a standstill. Nearly every country implemented strict lockdowns. 

Many of them also had a second lockdown due to the second wave. The second will arrive in the winter of 2020. The economy’s work slowed down a lot. It affected the output of the products.

The pandemic closed most offices and industries for a while. Supply chains suffered a lot of issues. As businesses closed, lots of people lost their jobs and income. Effective demand decreased too.

This article will provide a comprehensive analysis of the impact of coronavirus on the Indian economy.

GDP loss

• India’s economy had one of the sharpest global reductions. Due to the coronavirus outbreak lockdown was implementted. During that time, the GDP growth reduced by 23.9%. The nation’s GDP shrank to 7.3% in 2020–21. 
• The decline brought on by the coronavirus outbreak is visible here. India’s growth rate in 2019 was among the best. The national unemployment rate was 7.1% in 2020.  
• The government transferred funding in March 2021. It was when the second wave of the epidemic broke out. It strengthened India’s vaccine drive. Over a billion vaccine doses were provided across the nation until February 2022.  
• It was estimated that domestic inflation would start to drop in 2021. But, protests rose in various areas in 2022. Thus, the issue of unemployment remained. 
• The NSO made preliminary estimates public on August 31, 2022. India’s GDP during the first quarter (April-June) of the current fiscal year 2022–23 increased by 13.5%. The GDP increased by 20.1% in the corresponding quarter of 2021–2022.

 (Note: NSO stands for National Statistical Office.)

Impact on Agriculture and Food

• The rabi harvest in India was ongoing when the lockdown took place. The sale of the product could’ve brought large profits for the farmers. But it was stopped due to the partial collapse of the food supply system.
• The declining farm-gate prices also hit revenue. The impact of coronavirus on the Indian economy was huge.
• The coronavirus outbreak suspended international trade. It reduced the demand for Indian agricultural products on a large scale.
• Not only had global trade ceased, but so had domestic trade as well. Due to a lack of transportation, farmers could not take the produce to markets. The holds on the domestic movement of products were also a hindrance.
• Agriculture market arrivals in India were ineffective. It was so because the supply networks were improper. Online grocery platforms were affected due to restrictions on transport. Thus, farmers all around India suffered a lot of financial damage due to the coronavirus outbreak. 

Oil

• The Indian oil and gas sector accounts for 5.2% of the world’s oil demand. India is the third-largest energy user after the United States and China.  
• The nationwide lockdown reduced the demand for fuel. It was responsible for two-thirds of the oil and gas sector’s demand.  
• Bulk and personal transportation were also impacted. 
• There was a sharp decline in crude prices during the coronavirus outbreak. Even so, the government hiked the excise and special excise taxes. It aimed to make up for the lost revenue. Moreover, the government also raised the price of toll roads. 

Tourism and Flight Networks

• The flight industry and tourism cover quite a bit of our GDP. They were the first businesses to be harmed by the pandemic. 
• Experts agreed that COVID had a greater impact on them than the 2008 financial crisis. 
• There were nearly 35 million layoffs in these two businesses. It accounts for about 65% of the workforce. The massive cash flow problems were responsible for it. 
• IATO (Indian Association of Tour Operation) estimates that these industries could lose up to 85 billion rupees. Thus, the coronavirus outbreak affected aviation and tourism finance in India.

E-Commerce

• Following the coronavirus outbreak in March 2020, unemployment increased a lot. In the first few months of 2020, many workers left the labor field. 
• From May 2020 on, there was some recovery. Yet, the size of the labor force continued to suffer. It had decreased from its early 2020 level by mid-2021. 
• The number of employed people shrank even faster than the labor force. The official sector also experienced an influence on employment. The informal sector was no different. 
• In India, there were more than 80 million salaried employees during 2019–2020. More than 10 million people had lost their jobs by April 2020. 

Cash Flow

•  More than half of Indian businesses are still having functional problems. Nearly all are experiencing cash flow issues.  
• The coronavirus damaged more than 50% of businesses. This data was provided by FICCI. 
• Cash flow issues brought on by the slow economic growth affected principal, interest, taxes, liquidity, and other crucial expenses.

(Note: FCCI is the Federation of Indian Chambers of Commerce and Industry.)

Pharmaceuticals

• Since the COVID-19 pandemic began, this industry has been expanding. India, being the biggest supplier of medicines, was crucial here. Indeed, this had a major effect on the Indian economy too. 
• At the beginning of 2020, a market worth $55 billion was booming in India. The country was supplying hydroxychloroquine to countries all over the world. This also included:  
  • USA
  • UK
  • Canada
  • Middle Eastern countries
• Due to the coronavirus outbreak, the cost of raw materials imported from China has increased.  
• The generic medications and their cash flow were affected due to: 
  • Reliance on imports
  • Improper supply-chain.
  • Lack of workers in the field.
• Despite the drawbacks, the government vaccinated more than 1 billion people in India.

Conclusion

Every crisis creates a new chance to reconsider the steps taken for improvement.

Given the impact of coronavirus on the Indian economy. should adopt formative models.

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