How Is The Indian Economy Affected By COVID-19?
COVID-19 basics:
Coronaviruses are a large family of viruses that cause illnesses and disorders ranging from common colds to Middle East Respiratory Syndrome (MERS-CoV) and Severe Acute Respiratory Syndrome (SARS-CoV). The pandemic currently being faced in 2020 is termed as Coronavirus Disease 2019, or COVID-19 for short.
COVID-19 is caused by a novel strain of the coronavirus, n-CoV – now medically known as SARS-CoV-2. They are zoonotic viruses that can be transmitted between animals and people. Investigations have concluded that SARS-CoV was transmitted from civet cats, and MERS-CoV from dromedary camels. From this, an extrapolation has been made stating that SARS-CoV-2 has a probable animal origin.
Common signs of infection across the coronavirus board includes respiratory symptoms, fever, coughs, and breathing difficulties. This can complicate into various severe issues such as pneumonia, SARS, kidney failure, and sometimes death.
A few methods to prevent the transmission of coronaviruses, as recommended by the WHO, are regular hand washing, mouth and nose covering while coughing or sneezing, and thorough cooking of meat and eggs. Avoidance of close contact with previously-affected people is an important rule to follow as well – now popularly termed as “social distancing”.
COVID-19 in India:
According to the Ministry of Health and Family Welfare (MoHFW), the number of active COVID-19 cases in India have almost touched the 170,000 mark as of 20 June, 2020. Taking the case history into consideration, there are just above 200,000 cured patients in the country, with close to 13,000 deaths – and out of all of these huge numbers, one of them migrated outside.
The Ministry has also published various advisory notices and guides on different How To and What To situations that may occur during the period of the pandemic, including regularly updated suggestions for managing healthcare workers in COVID-active areas of hospitals, an audio-visual presentation on how spit can increase the risk of infecting someone with COVID-19, among others. With detailed planning and forewarnings, India is managing to flatten the curve of the infection.
Affecting the nation’s economy:
COVID-19 has been a largely disruptive factor when it comes to the economics of India.
In the fourth quarter of the 2020 fiscal year, India’s growth went down by 3.1%, according to the Ministry of Statistics. The Chief Economic Advisor to the Government of India has stated that this drop is the effect of the main causality, the widespread presence of SARS-CoV-2. The coronavirus pandemic has had a negative impact on the economy of the nation.
Notably enough, the country had been experiencing a pre-pandemic slowdown economically as well, and the pandemic has helped in magnifying pre-existing risks present in India’s economic outlook, as said by the World Bank. Before the pandemic, rating agencies had revised India’s economic growth for the fiscal year of 2021 as one of the lowest figures India has encountered since the 1990s economic liberalization of the country.
But, ever since the announcement of the economic package in mid-May, India’s GDP estimated were downgraded further into the negative figures, signalling a deep recession for the nation. CRISIL has announced that this could be India’s worst recession period ever since its independence in the year of 1947.
State Bank of India’s research has concluded that there may be over a 40% contraction in India’s GDP, and may vary all over the country depending on the sector and state, among other parameters.
Between the months of March and April, unemployment in the nation rose from 6.7% to 26%, by a factor of almost four times larger than pre-pandemic numbers. An estimated 140 million citizens have lost their employment status during the heavy lockdown that India was (and still may be) under.
Crunching the money:
All across the country, more than 45% of the households have reported raw income drops in comparison to last year’s numbers. The employed ones are not well-off either, as there have been numerous reports of salary cuts all across various organizations in India.
During the lockdown, the country’s economy was expected to lose an estimated USD 4.5 billion every single day it remained shut. Out of the USD 2.8 trillion economy being run in the nation, less than 25% of the entire system was barely functional and registering any sort of movement in the markets. Supply chains are under distress due to the lockdown, due to the initial lack of clarity between essentials and non-essentials.
The most risked group of people in the economy are informal sector and daily wage workers, as they have always been. Farmers that had invested in perishable foods prior to the unforeseen circumstances being faced today are also facing uncertainty all across India.
Most major organizations across the nation have either temporarily suspended or significantly reduced their operations in such a time. New and upcoming startups have taken a deep fall as the pandemic has affected their funding levels. Stock markets in India recorded the worst losses faced by various institutions in the history of India on the 23rd of March, 2020.
The announcement of the lockdown on 25th March led to SENSEX ad NIFTY posting their largest profits seen in eleven years.
On the 26th of March, a number of economic relief measures for the poor were announced, totalling to a sum over USD 24 billion. The very next day, the Reserve Bank of India (RBI) followed to up with a number of measures that would free up USD 52 billion to support the country’s financial system. Two huge banks, the World Bank and Asian Development Bank, have approved their support to India in order to tackle the coronavirus pandemic.
Domestic economic problems:
As of June 8, India was on John Hopkins University’s dashboard, placing seventh on the list of countries with most infections – at the time, it had recorded a massive 258,090 positive cases, with 7,263 recorded deaths. In the country’s latest economic projections, India’s GDP is expected to contract by 6.8% in its current fiscal year, worse than its slowest-in-11-years climb the last quarter.
An approximate 84% of Indian households are facing income decreases since the beginning of the lockdown, according to a study published by the Universities of Pennsylvania and Chicago, and Centre for Monitoring the India Economy, Mumbai. They had also concluded that the pandemic had caused a sharp and broad negative impact on household income, as a third of all households may not be able to survive beyond a week without additional assistance.
In response to the pandemic:
The study had stated that direct and immediate transfers of food and cash are of very high priority when it comes to responding to the people in the face of the coronavirus pandemic. Such transfers must be broad-based and reach most of the income distribution, as it is clear that nearly everyone but the wealthiest have watched their incomes fall short and get cut of their lives due to uncontrollable circumstances. Such victims of the pandemic require additional resources in order to survive.
CMIE had surveyed nearly 5800 households across 27 Indian states in the last two weeks of April, asking them various questions, including their incomes in relation to the lockdown, and their expected run before they run out of money. They layered these results on top of other data, including per-capita household income, and rural-urban classifications.
The end result of all studies conducted on the Indian economy pre- and post-pandemic is clearly put as –
- Managing the endemic and the resultant public health crisis via augmented financial resources, increased insurances, and technological solutions.
- Protecting income and employment in particular for the more vulnerable sections of the society by implementation of direct cash transfer programs that are backed by adequate monitoring and evaluation mechanisms, utilizing existing digital payment infrastructures.
- Supporting the corporate sector to minimize adverse economic impact and facilitate recovery quickly through immediate and medium-to-long measures that help reposition India in the world’s global value chain.
