Impact of Corona Virus and Lockdown on Indian Economy, Industries and Different Sectors!

Synopsis

This Paper will be talking about the impact of an ongoing pandemic in the whole world known as the coronavirus. The Paper will delve deeper into the issue by studying and talking about the impact the Pandemic has had not only on the economy of India but also on the industries and different sectors of the Country mainly the Education, Entertainment, Sport, Import/Export etc. The paper also aims to provide suggestions that will help the country in such a state of chaos with the help of reports from the Confederation of Indian Industry.

The 2019–20 coronavirus pandemic is an ongoing pandemic of coronavirus disease 2019 (COVID-19) the outbreak of which was first identified in Wuhan, China, in December 2019. The World Health Organization (WHO) declared this outbreak on 30 January 2020 to be a Public Health Emergency of International Concern and recognized it as a pandemic on 11 March. There have been more than 723,500 cases of COVID-19 reported in over 190 countries and territories and death is count is estimated to be approximately 34,000. There have been efforts by not only the international health organization but also every country individually to prevent the spread of the virus which include travel restrictions, quarantines, curfews, workplace hazard controls, event postponements and cancellations, and facility closures. 

India isn’t far behind on taking precautions to fight against coronavirus. But the consequences of the 2019–20 coronavirus pandemic has had is far beyond the spread of the disease and efforts to quarantine it. Due to the pandemic the concerns have shifted from supply-side manufacturing issues to decreased business in the services sector. The fact that the outbreak of COVID-19 will have a significant impact on the global economy including economic slowdown, trade, supply chain disruption, commodities, and logistics can’t be ignored.

India is currently in the middle of a 21-day lockdown, that began on March 25, to contain the spread of the coronavirus. The lockdowns and restrictions on commercial activities and gatherings of people are going to have a strong impact on domestic growth from March onwards. It is being estimated by Barclays that India’s aggressive 21-day lockdown could bring the country’s growth down to 2.5% from the 4.5 per cent it had earlier estimated. According to Dun & Bradstreet's latest Economy Forecast, the probability of countries entering into recession and companies going bankrupt has increased and India is not likely to remain decoupled from the global meltdown.

The coronavirus outbreak might cost the global economy $1-2 trillion in 2020, according to the UN Conference on Trade and Development. Its potential impact on the Indian economy is not yet known, but several sectors are already feeling the pain. The announcement of the formation of an economic response task force by Prime Minister Narendra Modi to help cope with the impact of the outbreak, has not only disrupted supply chains from overseas, but is also now threatening to impact domestic production, as quarantine measures have restricted the movement of workers. Coronavirus will impact India's economic growth "severely", as the coronavirus lockdown is causing significant disruption across multiple sectors.Here's a look at the areas most impacted by the outbreak:

Impact on Education

Educational systems worldwide have been affected by this 2019–20 coronavirus pandemic, leading to the widespread closures of schools and universities. According to data released by UNESCO on 25 March, school and university closures due to COVID-19 were implemented nationwide in 165 countries. Including localized closures which affects over 1.5 billion students worldwide, accounting for 87% of enrolled learners. School closures impact not only students, teachers, and families, but have far-reaching economic and societal consequences.

On 16 March, India declared a countrywide lock-down of schools and colleges. On 19 March, the University Grants Commission asked universities to postpone exams till March 31. The board exams conducted by CBSE and ICSE boards have also been postponed until March 31.

Impact on Religion

The pandemic has impacted religion in various ways, including the cancellation of the worship services of various faiths, as well as the cancellation of pilgrimages surrounding observances and festivals.

On 18 March, the journey to Vaishno Devi Mandir in the Indian union territory of Jammu and Kashmir has been called off. Common people will not be able to go to the world famous Aarti to be held at the Ganges Ghat in Kashi. The entry of common people in Ganga Aarti has been banned by the district administration.

Due to a surge in confirmed cases across the state of Maharashtra, the health officials declared that religious sites will be closed down as a precautionary measure. These sites included Siddhivinayak Temple in Mumbai, Sai baba Temple in Shirdi etc.

Impact on Labour market

China's coronavirus pandemic resulted in the increase in the number of urban unemployed people by 5 million between January and February 2020.

Impact on Entertainment

Cinema

The 2019–20 coronavirus pandemic has had a substantial impact on the film industry. Across the world and to varying degrees, cinemas and movie theaters have been closed and film releases have been moved to future dates or delayed indefinitely with film productions also halted. As cinemas and movie theaters closed, the global box office dropped by billions of dollars, and the stock of film exhibitors dropped dramatically. The release of Indian film Sooryavanshi, which was initially scheduled to release on March 24, was postponed indefinitely, and the release of Fast and Furious 9 was pushed to April 2, 2021. The International Indian Film Academy Awards, planned to take place on March 27, was canceled. Massive losses in the industry have been predicted.

Television

The 2019–20 coronavirus pandemic has led to the shutting down or delay in production of television programs in several countries including India.

Impact on Tourism and Transportation

The pandemic has caused major events around the world to be cancelled or postponed and public venues and institutions to be closed. In many of the world's major cities, planned travel went down by 80-90%.

Impact on Aviation

The pandemic has had a significant impact on the aviation industry due to the resulting travel restrictions as well as a slump in demand among travellers. Significant reductions in passenger numbers have resulted in planes flying empty between airports and the cancellation of flights. As of March 6, Indian private carriers had cancelled 93 international flights and global airlines 492 flights. Indigo, India’s largest airline, has reported a 15-20% decline in daily bookings over the past few days, compared with the week-ago period, and expects its quarterly earnings to be “materially impacted”.

Impact on Sports Sector

Such significant disruption to the worldwide sporting calendar which has happened due to the 2019–20 coronavirus pandemic hadn’t been witnessed since World War II. Across the world and to varying degrees, sports events have been cancelled or postponed. Most major sporting events were cancelled or postponed, including the 2020 Summer Olympics in Tokyo which are for now postponed to 2021 but might have to be delayed by up to two years. This has put in vain all the preparations and hard work of years by athletes all around the world including India.

Football

In India, the remaining I-League matches were postponed and the Indian Super League final was played behind closed doors.

Badminton

All scheduled Badminton World Federation tournaments were suspended until April 12 due to coronavirus concerns. The affected tournaments are Swiss Open, India Open,

Cricket

On March 13, the Board of Control for Cricket in India (BCCI) announced that the start of 2020 Indian Premier League will be postponed from March 29 to April 15. IPL is one of the major revenue generating event in India and its postponement not only affects the players and owners but the revenue of the whole country. Later that day, it cancelled the ODI matches between India and South Africa on March 15 and 18, which were originally announced to be played without spectators.

Impact on the food industry

The 2019–20 coronavirus pandemic affects the global food industry as governments close down restaurants and bars to slow the spread of the virus. Closures of restaurants caused a ripple effect among related industries such as food production, liquor, wine, and beer production, food and beverage shipping, fishing, and farming.

Impact on Hospitality

35% fall is being reported in the restaurant business.With several companies restricting all but essential travel, business hotels in major cities could be left with a lot of empty rooms. As people become more cautious, restaurants have reported a decline of 30-35% in business in the past few days. And restaurants at malls have recorded a sharper drop. Multiplexes will also have to contend with a fall in demand. Delhi, Kerala and Jammu & Kashmir have ordered that cinemas be shut till March 31.

Major Industries in India affected due to Lockdown in China

Auto Industry:  If the shutdown in China continues then it is expected to result in an 8-10% contraction of Indian auto manufacturing in 2020.

Pharmaceuticals Industry: Despite being one of the top formulations of drug exporters in the world, the pharma industry of India relies heavily on import as of bulk drugs. Due to the coronavirus outbreak, it will also be impacted.

Textiles Industry: Several garments/textile factories in China have halted operations due to coronavirus outbreak. This in turn has affected the exports of fabric, yarn and other raw materials from India.

Electronics Industry: India’s electronic industry may face supply disruptions, reduction impact on product prices because its major supplier in the final product/ raw material used in the electronic industry is China.

IT Industry: The revenue and growth of Indian IT companies have been adversely impacted due to the New Year holidays in China being extended due to coronavirus outbreak.

Impact on Micro, Small and Medium Enterprises (MSMEs)

Even if global economies bounce back sooner than expected, Indian MSMEs are likely to pay a high price. These companies are too small to have enough of a cushion to last through a pandemic like this one. Many of these companies have been asked to down shutters or curtail operations while still paying employees while still having to pay meeting costs for taxes, power, and other utilities. The MSME representatives have appealed to the government for concrete action which include tax concessions, easy access to credit, GST write-offs, and reimbursement or concession for wage-guarantee.

Suggestion by the Confederation of Indian Industry (CII):

Indian industry has urged the government to provide relief measures in wake of the rapidly spreading Covid-19 pandemic that has derailed the economy. According to Confederation of Indian Industry (CII) GDP could fall below 5% in FY 2021 if policy action is not taken urgently. CII said the government should consider providing a strong fiscal stimulus to the extent of 1% of GDP, or â‚¹2 trillion, to the poor, which would help them financially and also spur consumer demand. It has also suggested removing a long-term capital gains tax of 10% and fixing the total dividend distribution tax at 25%. The industry body has also urged the Reserve Bank of India (RBI) to undertake an immediate repo rate reduction of 50 basis points along with a 50-basis points reduction in cash reserve ratio to ensure sufficient liquidity and cheaper funds. CII also urged the central bank to consider relaxing the non-performing asset recognition norms from 90 days to 180 days till 30 September. India, being the fifth largest economy in the world, cannot be found lagging far behind in taking due rectifying actions in time. The time is then perfectly ripe for RBI to roll out monetary/ fiscal stimulus to protect business from going bankrupt. Mr. Hiranandani manager of CII suggested a moratorium for debt servicing that includes principal and interest, reduction of interest rates, and rescheduling of loan repayments. Rating agencies may continue to carry out their surveillance, they should be asked not to downgrade ratings for a while, he said.

Conclusion

Prime Minister Narendra Modi rightly said in his address to the nation that if this pandemic is not contained, it could set us back by decades. Overall, the impact of coronavirus on the Indian industries is moderate.Even though impact on India’s GDP growth will be significant, India may not slip into a recession, unlike the EU, the US, or Asia-Pacific who have stronger trade ties to China. In India, GDP growth is already at a decadal low and this further dent in economic output due to the pandemic will bring more pain to workers who have seen their wages erode in recent times. The Finance minister of India Nirmala Sitharaman announced a $23 billion package aimed at cushioning the disruption. India’s central bank joined the fight a day later with sharp interest rate cuts and a slew of unconventional measures aimed at making credit available to beleaguered businesses. The measures suggested by the CII need to implemented on an urgent basis, have the potential to prevent the grave economic crisis that is on the horizon. It is no longer about investors and business. This is about the economic health of the country. The time to take action is right now. We need implementation on a war footing if we are to save the Indian economy from tanking.