The COVID‐19 pandemic is an unparalleled disruption to the global economy as production and demand fall. Developing economies, such as India, are not resistant to these external shocks and are expected to see economic development slow down. As such, after the introduction of Demonetization and Goods and Services Tax (GST), the Indian economy was going through a slow pace, and government was identifying ways to get the economy back on track. The COVID-19, however, crushed all dreams of economic recovery in the short term.
There have been losses in crores during the pandemic in sectors such as tourism, hospitality, aviation, textiles, agriculture, manufacturing, gems/jewellery, and start-ups, which mainly contribute to the economy and job generation. An overall loss of 5 lakh crores and work losses for 4 crore people directly and indirectly connected to the tourism sector has been expected by the tourism community. The hospitality industry has estimated losses of Rs 30,000 crore, particularly the hotel chains, which can lead to job losses of 15 lakh people. Similarly, the aviation sector has an expected loss of above Rs 8,200 crore as international and domestic flights remain grounded. The textile industry consists of micro, small and medium enterprises and relies on people’s expertise, predicting one crore job cuts due to lack of finances, services and decrease in demand for textiles and lockdown-related logistics problems.
Due to COVID-19, the agriculture sector has also been affected. During the pandemic, there has been an increased demand for maize, tomatoes, and other crops. However, due to supply chain challenges, farm produce is unlikely to reach customers. Farmers have then been pressurised to reduce costs. As they are unable to harvest the first flush, the tea industry has recorded an 8% decline in tea exports. The agriculture sector has been plagued by the unavailability of migrant workers to carry out processing operations, and supply chain disturbances. In addition, prices of grains, pulses, vegetables, and milk were also affected by the closing of hotels, restaurants, sweet shops, and tea stores. In the meantime, poultry farmers have been badly hit because of misinformation, particularly on social media, that the COVID-19 carriers are chicken.
Around 51 million people are employed by the construction industry in India. With such a size, the effect of the shock of COVID-19 is similarly large. Fear of sickness, the termination of ongoing programs, loss of jobs and lack of food have forced migrant workers to leave the areas in which they were engaged. Due to the lockdown and suspension of public transport services in the region, the development units are heavily affected. Automakers, mobile producers, consumer electronics corporations and several others have ordered shutdowns that inflict incalculable harm to key product development, resulting in a substantial loss of sales. Due to the termination of operation, lack of finances, and failure to communicate and commute with customers, the COVID-19 forced start-up units to close. It is reported that retail prices of gems/jewellery in India have tanked 80 percent due to the COVID-19 pandemic. By affecting the consumption of both important and luxury goods, the falling footfalls in shopping complexes and movie complexes have impacted the retail industry. With all the stores shutting their services in the present situation, the workers’ jobs are at a tremendous risk.
Over the pandemic, the fast-moving consumer durables’ (FMCG) sector that supplies grocery goods, milk, and hygiene products has seen a rise in demand. The impact of the lockdowns will be borne by unsuspected jobs across industries that impact lives, livelihoods, and therefore the economy as a whole.
The economic effect of the corona virus pandemic has been highly destructive in India. The temporary halt in economic operations, which resulted in a 34.6 percent decline in India’s exports and 28.7 percent in imports as countries sealed their borders, a large decline in stock markets, and minimal work in the service sectors, raised the question of how can the Indian economy revive? India’s development for fiscal year 2021 has been downgraded by the World Bank and credit rating agencies, with the lowest estimates India has seen in three decades since India’s 1991 economic liberalization. However, India’s forecast for the financial year 2021-22 of 1.9 percent GDP growth by the International Monetary Fund (IMF) is the highest among G-20 nations.
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Duflo, Esther, Abhijit Banerjee (2020), ‘A prescription for action: Nine steps after the next 21 days’, Indian Express, March 29, 2020
Kapur, Dev and Subramanian, Arvind (2020), ‘How coronavirus crisis can be converted to opportunity to fundamentally strengthen Indian economy’, Indian Express, April 3, 2020
Sengupta, Rajeswari and Harsh Vardhan (2019), ‘How banking crisis is impeding India’s economy’, East Asia Forum, 3 October 2019
Dr Namrata Shrivastava
Asst. Professor (Economics)
Kalinga University Raipur
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