The economic impact of the Covid-19 pandemic in India has been largely disruptive. India’s growth in the fourth quarter of the fiscal year 2020 went down to 3.1% according to the Ministry of Statistics. The Chief Economic Adviser to the Government of India said that this drop is mainly due to the coronavirus pandemic effect on the Indian economy. Notably India had also been witnessing a pre-pandemic slowdown, and according to the World Bank, the current pandemic has “magnified pre-existing risks to India’s economic outlook”.
Economists slashed GDP rates for the predictable future due to the obvious impact of the lockdown. However, it was also estimated that the country might bounce back quickly because its industry composition, with unorganized markets being largely dominant. Losses from organized sectors amounted to an estimated nine trillion rupees in late March, projected to increase with the prolonging of the lockdown. As expected, the most affected industries included services and manufacturing, specifically travel & tourism, financial services, mining and construction, with declining rates of up to 23 percent between April and June 2020.
Recently an industry survey that is jointly conducted by industry body Ficci and tax consultancy Dhruva advisors and took responses from about 380 companies across the sectors. It is said that businesses are grappling with “tremendous uncertainty” about their future.
According to the survey, COVID-19 is having a ‘deep impact’ on Indian businesses, over the coming month’s jobs are at high risk because firms are looking for some reduction in manpower. Further, it is added that already COVID-19 crisis has caused an unprecedented collapse in economic activities over the last few weeks.
The present situation is having a “high to very high” level impact on their business according to almost 72 per cent respondents. Further, 70 per cent of the surveyed firms are expecting a negative growth sales in the fiscal year 2020-21.
Ficci said in a statement, “The survey clearly highlights that unless a substantive economic package is announced by the government immediately, we could see a permanent impairment of a large section of the industry, which may lose the opportunity to come back to life again.”
The survey found:
–In respect to the approved expansion plans, around 61 per cent of the respondents expect to postpone such expansions for a period of up to 6 or 12 months, while 33 per cent expect it to for more than 12 months.
–Surveyed firms of around 60 per cent have postponed their fund-raising plans for the next 6-12 months. Also, nearly 25 per cent of the firms have decided the same.
–Surveyed firms around 43 per cent have reported that they do not predict an impact on exports. Further, 34 per cent said that exports would take a hit by more than 10 per cent.
According to Du & Bradstreet, COVID-19 no doubt disrupted human lives and global supply chain but the pandemic is a severe demand shock which has offset the green shoots of recovery of the Indian economy that was visible towards the end of 2019 and early 2020.
Almost four months has passed, 1.3 Billion Indians have gradually adjusted to the new normal and its completely alright because there isn’t any option left for us. Health workers, security services are working tirelessly to ensure our safety. Centre and State government machinery along with supply chains for essential goods & services are doing best to ensure that food & financial security is available for those who need it the most. Let us all do a favour to our Incredible Nation by helping to constrain the virus, make wise use of unlock period to avoid another lock-down period.