Coronavirus (COVID-19) Impact on Indian Economy

Coronavirus (COVID-19) Impact On India

Coronavirus infects more than 20 lakh people (dated 15 April 2020) and more than 1 lakh people are dead through the earth. All governments lockdown their countries because of which there is a great loss in the economy.

The COVID-19 pandemic is the defining global health crisis of our time and the greatest global humanitarian challenge the world has faced since World War II. The virus has spread widely, and the number of cases is rising daily as governments work to slow its spread. India has moved quickly, implementing a proactive, nationwide, 21-day lockdown, with the goal of flattening the curve and using the time to plan and resource responses adequately.

Along with an unprecedented human toll, COVID-19 has triggered a deep economic crisis. The global economic impact could be broader than any that we have seen since the Great Depression.

Several measures have already been announced to provide liquidity, limit the immediate NPL impact, and ease personal distress for needy households in India. This amount to around 0.8 percent of GDP. Additional measures could be considered to the tune of 10 lakh crore Indian rupees or more than 5 percent of GDP in the fiscal year 2021. All the estimated requirements may not necessarily be reflected in the fiscal deficit of the current year—for example, some support may be structured as contingent liabilities that only get reflected when they devolve. However, a package of this order of magnitude may be essential in supporting those dealing with the possible steep declines in aggregate demand and in protecting the financial system from the possible solvency and liquidity risks arising from stressed companies.

Poor People In India

Household demand could then be boosted beyond the support provided to needy households that the Indian government has already announced. Consideration could be given to an income-support program in which the government both pays for a share of the payroll for the 60 million informal contractual and permanent workers linked to companies and provides direct income support for the 135 million informal workers who are not on any form of company payroll. India’s foundational digital-identity infrastructure, Aadhaar, enables effective mechanisms for direct support, including through the Pradhan Mantri Jan-Dhan Yojana (PMJDY) and Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) programs and to landless Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) beneficiaries. Concessions for home buyers, such as tax rebates for a time-bound period, could stimulate the housing market and unlock the job multiplier.

Economy

The impact of the coronavirus pandemic and the lockdown it triggered is clearly visible in financial markets. But there is still no clarity on the deeper impact that it is having across businesses and industrial sectors. Based on assessments made by different analysts and industry body Ficci, there is an impact analysis on the retail sector.

Major loss of earnings, jobs

The outbreak of coronavirus is having a severe impact on people, economy and business. As responsible corporates, all retail players are adopting necessary preventive actions to ensure the safety of their employees and customers. The end objective is to ensure the easy and uninterrupted availability of essential food and grocery products at affordable prices so that people don’t panic. During these critical times, it is imperative for all stakeholders to come together. Given the widespread effect of COVID, business across sectors is looking gloomy, impacting the economy at large. Shutting down of malls and shops has severely hurt business for all retailers. This could lead to major job losses as companies won’t be able to sustain this for too long.

Brokerage Emkay Global says COVID-19 disruption seems to be wide and deep, and unlike the demonetization, impact on consumer incomes appears significant with the hit on daily wagers and pay cuts across companies. Consumer demand, which was already slowing down before this disruption, is likely to weaken further, thereby reducing our growth forecasts.

Major earnings cuts ahead

Emkay Global says the fall in crude prices and moderating agri-input prices should drive margin gains for most staples. But it cut earnings estimates by 3-15% due to the impact of the disruption and a slow recovery.

Coronavirus (COVID-19) Impact on Indian Economy