Impact of Covid 19 on Economy

The Corona Pandemic has tremendously frightened the whole humanity on the globe with its outbreak
for the first time ever in the late months of year 2019 but thereafter came into global recognition in
January 2020 when got spread throughout China and diseased lakhs of population of Wuhan, the capital
city of Hubei province of China alone. The Novel Covid 19 (the terminology used for Corona virus
disease originated in year 2019 novel word is used for the disease for which the human beings had no
clue) was there after recognized as Global pandemic by WHO (World Health Organization). The disease
has so far rigorously affected on the Global Environment not only with the increasing death trolls all over
the world, but has also affected worldwide economy as well. Since origination it is continuously changing
its Epicentre from China to Italy, Australia and many other countries including India as well affecting the
Indian market operations and thrashing the Expectations / dream of 5 billion US dollars economy of the
Narendra Modi Led Indian Government.

Now keeping besides the global scenario and focusing only on the Indian economy with the Deeper
concern provides us with the terrific impact the virus can have on the Indian economy with the rapidly
increasing frustrations over future growth prospects for the investors and traders in the forecoming
days.

Now taking an overlook around the several Driving sectors of the economy that has been tremendously
affected, especially in the last quarter of the financial year 2019-20. The brief explanation of the economic
crisis, India is currently facing can be traced from the effects of virus on the sectoral growth is as belows;

• Service sector- The Indian service sector that contributed approximately 54.40 % of the
total gross domestic product of our country in FY 2018-19 with services like hotel industry trade
and transportation storage and communication accounting for about 19% of the total
contribution is now facing a huge challenge due to the spread of this deadly virus, it is estimated
that since the outbreak of the epidemic the hotel industry with the total Occupancy of 2.8 crore
rooms is currently facing an idle occupancy of 85% and above following an expected negative
impact on Jobs of approximately 3.8 crore people in India, since it has been incurring daily losses
of Rs 2500 crore on an estimation further in transport industry which is also key Driver/Pillar of
the economy with about 95 lakh truck running on roads on daily basis out of which about 65
lakh trucks are facing idle usage and thus is bearing loss of about 1200 crore rupees per day on
an estimation.

• Retail sector In the wake of Expected economic crisis all over the world except the market
of necessity and durable goods just because of its increased supply in Lockdown Situation) is
facing a deep fall of about 75% of the expected revenue in the march month and especially in the
organized sector (which is currently providing employment to about 60 lakh people across
India) due to the heavy losses estimated that there can be a loss to jobs of about 24 lakh
Employees of this sector in India as per The Retailers Association of India (RAI). Supplies of item
like gold and clothing will be facing an acute demand in the current period.
• Oil and natural gas extraction industries The top Giants of Oil and Natural gas
extraction sector in India including Oil and Natural Gas Corporation of India (ONGC) Cairn
India and Reliance refinery has reduced the extraction capacity in the wake of Covid 19 impact in
the Domestic and International Markets Government owned ONGC has reportedly decided to
scale down its natural gas extraction capacity to 25.9 crore cubic metre per day lowering by 10%
due to shortage of consumer demand and also the declining prices of Natural Gas in the
international market to lowest price of three decades to $29 per Barrel causing which the
company is forced to bear huge cash losses per day.

• Aviation sector The Aviation Industry which contributes Rs 5.4 lakh crore to the total GDP
of
India (in value) but due to the prohibition of entry to the the domestic, International and
Chartered flights in India till 14th of April 2020 by the Aviation regularities there has been a
slump declined witnessed in the total revenue of the aviation companies in India. Taking
precisely, loss of 15,000 crores Rupees would be recorded in the February to April quarter as
estimated by the International Civil Aviation organization (ICAO) due to the 30 to 35% cut in in
the number of Routes by the organization the condition are expected to emerge more severely
since the staff including the cabin crew members and and other have been sent on leave with
their salaries due.

• Milk production/Dairy product industries Due to unanticipated lockdown in India,

• Unorganised sector this sector has always been the most crucial sector of the economy
due to the the reliability of majority (of about 93%) of the total workforce of the country in the
sector including the daily wage rate labourers being affected on a drastic level since these
labourers were hired by the MSMEs which themselves are also facing huge disturbances
currently. The workforce of the sector will be used affected in the most lockdown sessions and
may lose their jobs and thereby the impact of this sector cannot be precisely calculated.

• Stock market operations Since the advent of covid 19 impact in India there has been a
severe downfall in the top stock market indices live Sensex and Nifty since February 2020 BSE
Indices has witnessed fall of approximately 33.2% till now while the NSE indices had also fell by
nearly 28% the midcap and smallcap indices has also been lowered by 32.5% and 35% respectively
during the same period. There has been a fall in the MPS of Auto, Finance and banking Sector
companies. Also during the last quarter of financial year 2019-20 the Foreign Institutional
Investor (FIIs) and Foreign Portfolio Investors (FPI) has withdrawn around 116300.77 crores
Rupees from the Indian equity and debt markets.
 • Growth rate projections Several credit rating agencies has reduced their growth rate
projections for India for the financial year 2020-21. Agencies including which Fitch solutions, India
ratings and Moody’s have projected growth rate below 5% for financial year 2020 21 whereas
FITCH has projected growth of 4.6 % from 5.4% (PY) Moody’s has predicted only 2.5 % from the
earlier production level of 5.3 % the reason behind the lower projection is poor consumption in
the market and regular withdrawing by the FIIs from Indian market, however it is also claim that
the effects of Covid19 impact on Indian economy is reduced using increased gross exports and
Government efforts.

• Combating with Covid19 effects to combat with the Crisis the central government
along with RBI has taken various steps like lowering repo rate by 0.75% and offering Moratorium
for 3 months on payment of EMIs on all types of commercial, home loans as outstanding on 1st
March 2020 to reduce interest burden on MSMEs small traders and households. Also to assist in
providing liquidity in market the central government has also announced relief packages of
around 1.7 lakh crore rupees which is expected to benefit MSMEs and Middle Class families at
the larger impact also. Government has appealed the corporate houses to contribute towards
relief fund by allowing their contribution as expenditure towards
CSR activities, The PM Care fund has so far received contributions of around 52000 crore rupees.

Though the Indian economy is facing a tough time yet there are various sectors that has witnessed
growth in terms of startups, in the field of e-commerce operations, consumption of E-streaming, Tele
and video conferencing application has increased as a positive impact in these days. There have been an
active venture capital investment raised by the startups in the field of laboratory research medical
equipment, test kids and many other which has a larger and future growth prospects in a longer Run

“Though Indian Economy is going through tough face in the epidemic period, it has potentials to recover
due to structural strengths and government policies” – International Monetary Fund (IMF) what we can
do today is “Staying safe by staying at Home”

Thank You

(I hereby claim that the document is prepared by extensive research and is not copied from internet and
the figures used are as per estimated by the periodicals referred by me)

Sourav Jangid
(CRO0579277)