Impact of a pandemic on Indian Economy

Impact of a pandemic on Indian Economy

Abstract:
This paper investigates the Impact of a pandemic on Indian Economy. The main focus of this study of this research is find out the economic impact in all the various sectors which will help us in understanding the pandemic better, and how deep is the impact. This study considers various reports and concludes that despite of the sluggish economic growth of India since 2019, the outbreak of COVID-19 has led to a further drop in the economy. The nation has also been listed as among the top affected nations across the globe due to the pandemic.

Keywords: Pandemic, Covid-19, Indian Economy.

———————————————————————————————————————

Introduction:

Any pandemic comes with the possibility of negative economic impacts. Currently, several nations, including India, are steadily going to lockdown due to the COVID-19 pandemic. The World Health Organization declared the virus outbreak a pandemic during the second week of March 2020. The declaration came four months after the novel virus first made headlines. Several suspected cases of COVID-19 have been tested in India, resulting in more than two thousand confirmed cases.

Business in India:

Businesses in India are operating under fear of an impending collapse in the financial market. Even before the onset of this pandemic, the global economy was dealing with turbulence on account of disruptions in attenuated growth and trade flows. The situation has now been aggravated by the supply, demand, and liquidity shocks that have been inflicted by COVID-19. Therefore, although India has already been affected by a sluggish economic growth since 2019, the situation has worsened because of the COVID-19 pandemic.

GDP in India:

The real Gross Domestic Product of India decreased to its lowest for the last six years, and the outbreak of COVID-19 has posed fresh challenges. Attempts to contain the spread of the virus, such as “complete lockdowns” (KPMG 10), have brought a standstill to the economic activity. The situation has also negatively affected investment and consumption. Even though businesses in India are in a position of insulating themselves from the disruption of the global supply chain brought about by the outbreak, their exports to nations that have been affected by COVID-19 may take a hit because of relative lower dependence on intermediate imports. In New Delhi, the COVID-19 disease is a worse demand shock for the economy in India. The situation might contribute to a further suppression in the gross domestic product of the nation, as the pandemic induced a lockdown, which has caused a very huge disruption across several sectors.

The trade effect:

The trade effect of the coronavirus pandemic for India is approximated to be about “348 million dollars” (Kumar, thombare & kale 301). The nation has also been listed among the top fifteen most affected economies after the outbreak of the pandemic. According to the Asian Development bank, the outbreak of COVID-19 could cost the economy of India between “$388 million and $30 billion” (Kumar, thombare & kale 301). The pandemic has led to a huge disruption of the Chinese economy, and that clearly shows that there will also be a “disruption in the imports” (Kumar, Thombare and Kale 302). Besides, the processes of production and the supply of consumer products in India will also be affected. Other nations around the globe rely on exports from India, and because of the lockdowns that are being implemented, it will not be easy for the products to reach most of these nations, and that will negatively affect the economy of India.

Chemical industry:

The chemical sector in the country is likely to be one of the most affected sectors during the presence of the pandemic. Several chemical firms in India have already been closed down, and that is an indication that there will be a restriction on logistics or shipments. It has been discovered by economic experts in India that twenty percent of the production has been affected because of the disruption in the supply of raw materials. For instance, China is the main supplier of Indigo, which is needed for denim. Corporations in India are likely to be affected, and that will force individuals to secure their supplies.

Auto industry:

The Indian auto industry, the electronics industry, and the foreign trade sector have also been affected by the deadly pandemic. Its effect on Indian firms will vary and depend on the extent of the businesses in China. It is evident that businesses in China have already been affected even though current “inventory levels” (Kumar, Thombare, and Kale 301) seem to be enough for the Indian industry. Additionally, the supplier of electronics in the region is China, and that shows that the electronic industry in India might face disruptions in supply and production. There might also be a reduction effect on the price of products because of the nation’s heavy reliance on electronics component supply either directly or indirectly and local manufacturing. The foreign trade sector in India will also suffer severely due to the outbreak of COVID-19. SINCE 2004, China has been the biggest source of imports for India.

Global supply chain:

Apart from the disruption in the “global supply chain” (The Economic Times Para 1), the pandemic has led to a worse demand shock that has affected the impressive recovery shoots of the economy in India that was being observed at the climax of 2019. Besides, a decline in the level of optimism in the course of the uncertainty has contributed to a closedown of enterprises bringing about disruptions in the world supply chain and a steady decline in the level of consumption. The gross domestic product in India has also been greatly affected by the pandemic even though the magnitude of the real effect would rely on the duration and severity of the pandemic, and that is still not yet known. The main three “channels of effect” (The Economic Times Para 1) for the businesses in India, which include macroeconomic factors, supply chain, and legal linkages, are the ones that have suffered the most. For instance, several Indian firms have linkages with firms in nations that have a huge number of confirmed coronavirus cases. A disruption in the global business means that there will be a negative effect on the operations of the firms. The impact of the pandemic will also be felt in all economic sectors of India.

Conclusion:

In conclusion, despite the sluggish economic growth of India since 2019, the outbreak of COVID-19 has led to a further drop in the economy. Besides, the nation has been listed as among the top affected nations across the globe due to the pandemic. Even though most sectors have been affected, the chemical sector is the one that has been largely hit, which has contributed to a drop in the gross domestic product. The Indian auto industry, the electronics industry, and the foreign trade sectors have also been affected, as most of the firms in the industry depend on supplies from other nations such as China. Thus, disruption is that the global supply chain will also mean that the economy of India will also be disrupted. The pandemic has also led to a worse demand shock, especially in New Delhi and that could lead to a further suppression of India’s economy.

References –

KPMG. Potential Impact of COVID-19 on the India Economy (2020). Retrieved from:            https://home.kpmg/content/dam/kpmg/in/pdf/2020/04/potential-impact-of-covid-19-on-     the-Indian-economy.pdf

Sunil Kumar, Pratibha B Thombare, and Pandurang A Kale (2020).

“Impact of coronavirus (COVID-19) on Indian Economy (2020)”.

Article ID- 23398 , ISSN: 2581-8317, Volume 2 – Issue 4 – April 2020 , PP 301-302.

Retrieved from:         https://www.researchgate.net/publication/340137009_Impact_of_coronavirus_COVID-            19_on_Indian_economy

The Economic Times, New Delhi(2020).COVID-19 pandemic ‘severe demand shock’ for Indian economy: D&B. Retrieved from:           https://economictimes.indiatimes.com/news/economy/finance/covid-19-pandemic- severe-demand-shock-for-indian-economy    db/articleshow/75081249.cms?utm_source=contentofinterest&utm_medium=text&utm_c  ampaign=cppst