“The Impact of Corona virus on Indian Economy”

India crosses more than 10000 cases of Corona and more than 3500 death in India. Indian Government made lockdown in country since 24th March 2020 and lockdown extended till 31st May 2020. The impact of the corona virus pandemic could lead to slowdown in domestic demand, erosion of purchasing power due to job losses or pay cuts and trickle-down effect of demand deferral will have a longer-lasting impact on some other sectors, especially where demand is discretionary in nature, it said. The high impact sectors in terms of risk on account of COVID-19 are aviation, hotels, restaurants, jewellery, retail, shipping, ports and port services. The medium impact sectors are automobiles, building materials; residential real estate’s while the low impact sectors includes education, dairy products, fertilizers, FMCG and healthcare among others. In the current scenario, extended demand disruptions are likely to lead to elongated payment cycles. The Indian economy was expected to lose over  32000 crore (US$4.5 billion) every day . A large number of farmers around the country who grow perishables are also facing uncertainty. Various businesses such as hotels and airlines, are cutting salaries and laying off employees. . Moody’s Investors Service downgraded its estimate of India’s GDP growth for 2020 from 5.3% to 2.5%. Fitch Ratings revised its estimate for India’s growth to 2%. India Ratings & Research also downgraded the FY21 estimate to 3.6% In India up to 53% of businesses have specified a certain amount of impact of shutdowns caused due to COVID-19 on operations. The Unemployment rate had increased nearly 26% unemployment across India, according to the “Centre for Monitoring Indian Economy. Around 140,000,000 (14crores) Indians lost employment in the lockdown. Various businesses such as hotels and airlines are cutting salaries and laying off employees. Revenue of Ola Cabs went down nearly 95% in March-April resulting in 1400 layoffs. An International Energy Agency report in April estimated India’s annual fuel consumption will decline 5.6% in 2020. Diesel demand will drop 6%.The impact of this on the second flush is not known. The entire Darjeeling tea based tea industry will see significant fall in revenue. Tea exports could drop up to 8% as a result .Major companies in India such as Larsen and Toubro, Bharat Forge, UltraTech Cement, Grasim Industries, the fashion and retail wing of  Aditya Birla Group, Tata Motors and Thermax have temporarily suspended or significantly reduced operations in a number of manufacturing facilities and factories across the country. iPhone producing companies in India have also suspended a majority of operations.

Mr. Nikunj Thakkar

Assistant Professor, R.B.Institute of Management Studies

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