A STUDY ON IMPACT OF COVID-19 ON
INDIAN ECONOMY
A Dissertation Submitted for partial fulfilment of
MASTER OF COMMERCE
DEPARTMENT OF COMMETCE
UNIVERSITY OF LUCKNOW
By
Pallavi Singh
University Roll no. 2110632010030
B.COM, Semester-VI
UNDER THE SUPERVISION OF
MR. SACHIN DIXIT
ASSISTANT PROFESSOR, DEPARTMENT OF COMMERCE
RAJAT P.G. COLLEGE, KAMTA LUCKNOW
(SESSION 2023-2024)
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CERTIFICATE
This is certified that this report is prepared based on the Dissertation project undertaken by
me on ―IMPACT OF COVID-19 ON INDIAN ECONOMY‖ is a work done by Pallavi
Singh, a student of B.COM., session 2022-2024, impartial fulfillment of the requirement for
the award of the degree of Bachelor of Commerce. This is an original work done by the
candidate under my supervision and guidance.
MR. SACHIN DIXIT
Assistant professor
Department of commerce
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DECLARATION
I Pallavi Singh, declare that the project report titled "IMPACT OF COVID-19 ON INDIAN
ECONOMY" is my original workand has not been published or submitted for any degree.
The data mentioned in this report were often during genuine work done and collected by me.
The data obtained from other sources have been duly acknowledged. The result embodied in
this project has not been submitted to any university or institute for the award of any degree.
Pallavi Singh
Roll no. 2110632010030
B.COM. SEMESTER- VI
Session 2022-2024
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ACKNOWLEDGEMENT
I would like to express my special thanks of gratitude to the almighty for giving me the
strength to complete this Dissertation. A heartful thanks to my professor mr. Sachin Dixit
who gave me the golden opportunity to do this wonderful project on the topic ―IMPACT OF
COVID-19 ON INDIAN ECONOMY―, which also helped me in doing a lot of research and
I came to know about so many new things. I am really thankful to her.
I am overwhelmed in all humbleness and gratefulness to acknowledge my depth to all those
who have helped me to put these ideas, well above the level of simplicity and into something
concrete.
Any attempt at any level can’t be satisfactorily completed without the support and guidance
of my parents and friends.
I would like to thank my parents who helped me a lot in gathering different information,
collecting data and guiding me from time to time in making this project, despite of their busy
schedules. They gave me different ideas in making this project unique.
Pallavi Singh
ROLL NO. 2110632010030
B.COM. SEMESTER VI
SESSION 2022-2024
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ABSTRACT
The outbreak of the Covid-19 pandemic is an unprecedented shock to the Indian economy.
The economy was already in a parlous state before Covid-19 struck. With the prolonged
country-wide lockdown, global economic downturn and associated disruption of demand and
supply chains, the economy is likely to face a protracted period of slowdown. The magnitude
of the economic impact will depend upon the duration and severity of the health crisis, the
duration of the lockdown and the manner in which the situation unfolds once the lockdown is
lifted. In this study, I described the negative as well as positive impact of covid on Indian
economy, analyse the policies that have been announced so far by the central government and
the Reserve Bank of India to ameliorate the economic shock and put forward a set of policy
recommendations for specific sectors.
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TABLE OF CONTENT
1.
Introduction
2.
Background and History of Covid-19
3.
Statement of Problem
4.
Significance of the Study
5.
Objectives of the Study
6.
Hypothesis
7.
Limitations of the Study
8.
Research Methodology
9.
Review of Literature
10.
Analysis and Description
10.1. Negative Impact of Covid-19
10.1.1. COVID-19 : A Human Disaster
10.1.2. Sectoral Impact
10.1.3. Greatest Emergency since Independence
10.1.4. Pre-Pandemic Slowdown
10.1.5. Ratings and GDP Estimates
10.1.6. Economic Danger versus Health Risk
10.2. Positive Impact of COVID-19
10.2.1. Big Opportunity for the Indian Economy
10.2.2. Falling Demand of Fuel
10.2.3. Crime Incidents have become Rarer
10.2.4. The Air is Cleaner and the Environment is Greener
10.2.5. Boosting localism
10.2.6. Wildlife is rejuvenating
10.2.7. Improving Environment
10.2.8. Some Emerging Sectors
10.3. Government Actions
10.3.1. Government Concerns and Commentary
10.3.2. Government Philosophy
10.3.3. Timeline
10.3.4. Lockdown Phases
10.3.5. Atmanirbhar Bharat Abhiyan
10.3.6. Economic Package Announcements
10.3.7. Protectionism
10.4. A Positive Outlook towards Near Future
10.5. Conclusion
10.6. Bibliography
7-9
10-15
16-17
18
18
19
19
20
21-22
23
23
23-24
25-34
35-36
36
36-38
38
39
39
39-40
40
40
41
41
41
42-44
44
44
45-46
46
47
51-52
53-54
55
56-58
59
60-61
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1. INTRODUCTION
The economy of India is characterized as a developing market economy having estimated
population of 1,38,00,04,385 in 2020. In the Indian economy, both private sector and public
sector companies co-exist in perfect harmony. The big industries, especially those for vast
public use, are public sector companies. Some examples are MTNL, Mahanagar Gas etc. And
the economy has seen a huge boost in the private sector as well since the liberalization in
1991. Hence India is the perfect example of a mixed economy.
It is the world's fifth-largest economy by nominal GDP and the third-largest by purchasing
power parity (PPP). According to the IMF, on a per capita income basis, India ranked 139th
by GDP (nominal) and 118th by GDP (PPP) in 2019. From independence in 1947 until 1991,
successive governments promoted protectionist economic policies with extensive state
intervention and regulation. The end of the Cold War and an acute balance of payments crisis
in 1991 led to the adoption of a broad program of economic liberalization. The annual
average GDP growth has been 7.0% (2017-18), 6.1% (2018-19), 4.2% (2019-20) and −3.2%
(2020-21). From 2014 to 2018, India was the world's fastest growing major economy,
surpassing China. Historically, India was the largest economy in the world for most of the
two millennia from the 1st until 19th century.
The long-term growth perspective of the Indian economy remains positive due to its young
population and corresponding low dependency ratio, healthy savings and investment rates,
and is increasing integration into the global economy. The economy slowed down in 2017,
due to shocks of "demonetization" in 2016 and introduction of Goods and Services Tax in
2017. Nearly 60% of India's GDP is driven by domestic private consumption and continues to
remain the world's sixth-largest consumer market. Apart from private consumption, India's
GDP is also fueled by government spending, investment, and exports. In 2018, India was the
world's tenth-largest importer and the nineteenth-largest exporter. India has been a member of
World Trade Organization since 1 January 1995. It ranks 63rd on Ease of doing business
index and 68th on Global Competitiveness Report. With 520-million-workers, the Indian
labour force is the world's second-largest as of 2019. India has one of the world's highest
number of billionaires and extreme income inequality. Since India has a vast informal
economy, barely 2% of Indians pay income taxes. During the 2008 global financial crisis the
economy faced mild slowdown. India undertook stimulus measures (both fiscal and
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monetary) to boost growth and generate demand; in subsequent years economic growth
revived. According to 2017 PricewaterhouseCoopers (PwC) report, India's GDP at
purchasing power parity could overtake that of the United States by 2050. According to
World Bank, to achieve sustainable economic development India must focus on public sector
reform, infrastructure, agricultural and rural development, removal of land and labour
regulations, financial inclusion, spur private investment and exports, education and public
health.
Talking about the GDP composition, the agriculture sector contributes 18%, industry sector
23% and service sector 61.5%. From the point of components, household consumption
contributes 59.1%, government consumption is 11.5%, investment in fixed capital is 28.5%,
investment in inventories is 3.9%, exports of goods and services is 19.1% and imports of
goods and services is −22%.
Unemployment rate is 5.4% in 2019, 6.1% in FY 2018 and there is negative increase of
23.3% in youth unemployment (15 to 24-year-olds; 2019).
Below is the chart of sectoral share in Employment across various NSSO rounds:
India ranks second globally in food and agricultural production, while agricultural exports
were $38.5 billion. The construction and real estate sector is the second largest employer after
agriculture, and a vital sector to gauge economic activity. The Indian textiles industry is
estimated at $150 billion and contributes 7% of industrial output and 2% of India's GDP
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while employs over 45 million people directly. The Indian IT industry is a major exporter of
IT services with $180 billion in revenue and employs over four million people. India's
telecommunication industry is the world's second largest by number of mobile phones,
smartphone, and internet users. It is the world's tenth-largest oil producer and the third-largest
oil consumer. The Indian automobile industry is the world's fourth largest by production. It
has $672 billion worth of retail market which contributes over 10% of India's GDP and has
one of world's fastest growing e-commerce markets. India has the world's fourth-largest
natural resources, with mining sector contributes 11% of the country's industrial GDP and
2.5% of total GDP. It is also the world's second-largest coal producer, the second-largest
cement producer, the second-largest steel producer, and the third-largest electricity producer.
The Indian economy was in its worst phase even before the coronavirus outbreak, with
growth in the gross domestic product (GDP) falling to a 11-year low of 4.2 per cent in 20192020. The economy grew by 3.1 per cent in the January-March quarter of 2019-2020, against
5.7 per cent at the same time a year ago, the slowest growth in at least eight years. According
to National Statistical Office data, the manufacturing sector has grown merely by 0.03 per
cent in FY 2019-20 compared to 5.7 per cent in the previous year. The growth of the
construction sector, which is responsible for a spillover effect on several other industries, too
declined to 1.3 per cent.
Gross capital formation has also remained low in FY 2019-20, while the growth of deposits
in banks declined to 7.9 per cent, compared to 10 per cent in the previous fiscal — hinting at
low-level savings. Bank credit growth more than halved to 6.1 per cent, compared to the
previous fiscal’s 13.3 per cent, that shows people’s consumption too will be lower.
The below diagram shows real gross domestic product (GDP) growth rate from 2009 to 2021
as compared to previous year :
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2. BACKGROUND AND HISTORY OF Covid-19
As most people in the world are now acutely aware, an outbreak of COVID-19 was detected
in mainland China in December of 2019. As of this writing, every continent in the world has
been affected by this highly contagious disease, with nearly a million cases diagnosed in over
200 countries worldwide.
The cause of this outbreak is a new virus, known as the severe acute respiratory syndrome
coronavirus 2 (SARS-CoV-2). On February 12, 2020, WHO officially named the disease
caused by the novel coronavirus as Coronavirus Disease 2019 (COVID-19).
Coronaviruses are a family of viruses that can cause mild to moderate upper-respiratory tract
illnesses such as the common cold, severe acute respiratory syndrome (SARS) and Middle
East respiratory syndrome (MERS).
COVID-19 likely originated in a ―wet market‖ in Wuhan, China. A wet market refers to a
marketplace with vendors selling live animals such as cats, dogs, rabbits, fish, and bats. The
name ―wet market‖ is a reference to the need to be constantly washing the floors in these
venues due to animal slaughter and to the melting ice used to preserve the food.
The common denominator among those who caught the virus in China had some level of
exposure to the Huanan Seafood Market in Wuhan. Researchers believe the new virus
probably mutated from a coronavirus common in animals which jumped over to humans in
the Wuhan marketplace.
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Dealing with the unforeseen challenges caused by the COVID-19 pandemic has taken a
significant toll on people all across the world. At the time of writing this, there are
over 2,700,000 confirmed cases of COVID-19 across the globe. According to official reports,
the largest numbers of confirmed cases are in the United States, Italy, Spain, and France.
However, even the countries that the new coronavirus has hit less aggressively are still under
considerable strain. India has crossed the grim milestone of 100,000 coronavirus deaths, the
third-highest in the world behind only the United States and Brazil. To date, India has more
than 6.6 million cases, second only to the US. However, the country’s recovery rate stands at
84 percent, the highest in the world, with more than 5.5 million people recovered from
coronavirus so far, according to the health ministry. Kerala's tally stands at 3,03,896, and
West Bengal has so far reported 3,02,020 cases of the novel coronavirus, according to the
Union Health Ministry's latest update. With over 15.43 lakh cases, Maharashtra's COVID-19
tally remains the highest among Indian states and union territories. As many as 213 countries
and territories have registered COVID-19 cases, and the entire world is buzzing with
uncertainty and questions: How long will the pandemic last? What will people’s lives look
like once the pandemic is over?
Many countries have declared restrictive measures, such as lockdown, shelter in place, or stay
at home orders, to contain the pandemic at a local level. However, the wildly differing
responses and response timelines have left people wondering if authorities failed to take the
situation seriously early on when they could have done more to slow down the spread of the
corona virus.
China appeared to manage the coronavirus outbreak effectively, putting in place early travel
bans within the country itself. As early as January 23, Chinese authorities declared a
nationwide travel ban, which, some experts suggest, may have averted over 700,000 COVID19 cases within the country. Earlier in April, China eased the lockdown measures in Wuhan,
the original epicenter of the new coronavirus outbreak, amid celebrations that the nation had
beaten the virus. Nevertheless, a recent study assessing the likely number of COVID-19
deaths in the country suggests that the virus may have hit even harder than the
authorities initially thought. Given the development of the situation in China, many people
have been questioning the appropriateness of measures that other countries around the world
have taken.
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Earlier in April, Japan’s Prime Minister Shinzo Abe declared a state of emergency. This
allowed the authorities to ask people to stay at home, though the government has not enforced
closures or restrictions.
This state of emergency remained in place till early May, though the steady number of
COVID-19 cases has reportedly moved doctors in Japan to warn of an impending breakdown
in their health care system.
There is a big shift in the world Indian market as well and the share market has witnessed
crashes day by day. Factories, Restaurants, Pubs, Markets, Flights, Super Markets, Malls,
Universities and Colleges etc. were shut down. Fear of corona virus has limited the
movement of the individuals. People were not even going to buy the daily essentials and
these all were somewhere impacting the economy of the world as a whole. The Organization
for Economic Co-operation and Development (OECD)reveals that they have cut their
expectation for global growth to 2.4% from 2.9%, and warns that it could fall as low as 1.5%.
India faces a huge decline in government revenues and growth of the income for at least two
quarters as the coronavirus hits economic activity of the country as a whole. A fall in investor
sentiment impacts privatization plans, government and industry.
The lockdown in India will have a sizeable impact on the economy mainly on consumption
which is the biggest component of GDP. India’s total electronic imports is equal to 45% that
of China. Around one-third of machinery and almost two-fifths of organic chemicals that
India purchases come from China. For automotive parts and fertilisers China’s share in
India’s import is more than 25%. Around 65 to 70% of active pharmaceutical ingredients and
around 90% of certain mobile phones come from China to India.
Covid-19 has disrupted global supply chains and this is generating spill over effects
throughout different levels of supplier networks. Global trade in 2020 will fall in every region
of the world, and will affect all sectors of the economy. This will impact countries that are
strong exporters (no output for their local companies), but also those that are importers (lack
of raw materials). The World Trade Organization (WTO) expects global trade to fall up to
32% this year due to the coronavirus pandemic.
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A global recession now seems inevitable. But how deep and long the downturn will be
depending on the success of measures taken to prevent the spread of COVID-19, the effects
of government policies to alleviate liquidity problems in SMEs and to support families under
financial distress. It also depends upon how companies react and prepare for the re-start of
economic activities. And, above all, it depends on how long the current lockdowns will last.
The country is facing an extra ordinary challenging time in this financial year. India has to
urgently find a way to cushion the demand side shocks induced by potential lockdowns and
other ongoing containment measure.
Developing countries like India has more fragile economic and social fabric and the present
situation will create more suffering for the unorganized sectors and migrant labourers.
Borrowing the words of former RBI governor C Rangarajan ―Government of India must
provide lifelines to businesses - extend loans and tax waivers to small businesses and the selfemployed to retain staff -- give direct support to severely affected industries and provide
more funds to states, tax waivers to households etc.‖
State/Union
Territory
Andaman and
Cases
Deaths
Recoveries
Active
4,207
58
3,945
204
Andhra Pradesh
800,684
6,544
762,419
31,721
Arunachal Pradesh
14,145
33
11,613
2,499
Assam
203,709[b]
900
179,846
22,963
Bihar
210,196
1,034
198,532
10,630
Chandigarh
13,920
214
13,009
697
Nicobar Islands
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172,580
1,738
146,222
24,620
3,220
2
3,167
51
Delhi
348,404
6,189
316,214
26,001
Goa
41,813
568
38,421
2,824
Gujarat
165,071
3,673
147,435
13,963
Haryana
155,765
1,705
143,978
10,082
Himachal Pradesh
20,040
285
17,135
2,620
90,752
1,424
81,486
7,842
Jharkhand
99,045
862
92,128
6,055
Karnataka
793,907
10,821
693,584
89,502
Kerala
377,834
1,281[c]
280,793
95,760
Ladakh
5,840
68
4,984
788
Lakshadweep
0
0
0
0
Madhya Pradesh
165,294
2,855
150,678
11,761
Maharashtra
1,632,544
43,015
1,445,103
144,426
Chhattisgarh
Dadra and Nagar
Haveli and Daman
and Diu
Jammu and
Kashmir
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Manipur
16,777
132
12,562
4,083
Meghalaya
8,801
79
7,091
1,631
Mizoram
2,387
0
2,189
198
Nagaland
8,436
28
6,570
1,838
Odisha
277,887
1,214
259,418
17,255
Puducherry
33,986
584
29,427
3,975
Punjab
130,157
4,095
121,735
4,327
Rajasthan
182,570
1,814
162,981
17,775
Sikkim
3,770
63
3,465
242
Tamil Nadu
703,250
10,858
659,432
32,960
Telangana
230,274
1,303
209,034
19,937
Tripura
30,135
340
27,740
2,055
Uttarakhand
59,796
979
54,161
4,656
Uttar Pradesh
466,060
6,830
430,962
28,268
West Bengal
341,426
6,368
298,587
36,471
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3. STATEMENT OF PROBLEM
The coronavirus COVID-19 pandemic is the defining global health crisis of our time and the
greatest challenge we have faced since World War Two. Since its emergence in Asia late last
year, the virus has spread to every continent except Antarctica.
This virus is lethal, taking lives of people day by day. Many people are losing their lives due
to this disease on a daily basis. Doctors and, healthcare workers and policemen etc are doing
a 24*7 jobs to protect lives of others. People with no symptoms are also being tested positive
which is not giving a clear-cut idea that who is infected or who isn’t. A simple conversation
with an infected person can infect others to death as well if precautions are not taken. Hence
it is important to take care to protect ourselves and others as well.
But the pandemic is much more than a health crisis, it's also an unprecedent socio-economic
crisis. Stressing every one of the countries it touches, it has the potential to create devastating
social, economic and political effects that will leave deep and longstanding scars.
Every day, people are losing jobs and income, with no way of knowing when normality will
return. Small island nations, heavily dependent on tourism, have empty hotels and deserted
beaches. The International Labour Organization estimates that 195 million jobs could be lost.
The World Bank projects a US$110 billion decline in remittances this year, which could
mean 800 million people will not be able to meet their basic needs.
No sector in an economy is untouched by the adverse effects of this pandemic. Every
economy has been slowing down due to regular lockdowns which was a necessity to prevent
the rapid transmission of this disease. But despite the lockdown scheme, it was not a very
powerful tool to prevent this disease. Around 80% of the population is highly got affected
economically. A complete lockdown is being taken across most of the countries which has
snatched away jobs of many people. All offices, schools, organizations etc are closed down
which created an economic crisis to most people. The owners of business organizations are
unable to pay to their employees and labours which resulted an increase in poverty. The
tourism sector is completely closed down due to lockdown which lead to lack of income to
survive for them.
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Migrated labours are in the most affected part of this pandemic. They used to move to
another place in search of jobs to feed their family. They did not have much savings as they
earn very little to hardly have basic survival needs. Due to sudden lockdown, they stuck in
their job place. No job gave them no reason to stay there. On top of it, they did not get any
transportation facilities to reach their home. Members of labourers’ family got into starving
due to lack of income which caused death to many people.
Education system got no rid in this pandemic. All school colleges are been closed as children
would be much safer in home rather than schools and colleges. Due to this, studies have been
greatly affected. Although all teachers are taking much efforts from their side to not let
disrupt the learning through online mode. But for small kids online learning is not bringing
fruitful results. Continuously watching screen is also affecting their sensitive eyes. Many
students are in mental stress regarding their career and committing suicide.
There are a lot more problems which aroused due to this pandemic. Some of them has been
discussed above. But apart from these, there are lot more problems which is existing in all
economies.
In this study we are aiming to have an in-depth knowledge about the problem and its possible
solutions.
4. significance of the study
The findings of this study will redound to the benefit of society considering that health plays
the major role in the ongoing scenario of coronavirus pandemic. This dissertation study has
been taken to convey the problem existing in the COVID-19 pandemic. The study has stated
about the problem, its effects on economy and its solutions. This study tried to cover all
aspects of COVID-19 and its adverse effects in depth. This study includes all the points
which are necessary to be known for everyone. This study includes all data and charts to
prove the accuracy level of the study. All the data which has been included in the content of
this study has been selected with due care and minimum personal bias. These data have been
taken from authentic sources which gives complete and accurate data points to its users. All
persons including government officials irrespective of their age, qualifications, or
perspectives can utilize this study to have an insight about the pandemic. Those who go
through the recommended approach derived from these results of the study will be able to
fight this ongoing pandemic better and can protect themselves. For the researcher (or the
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researchers if it is a group study), the study will help them uncover critical areas of the
problem that many researchers were not able to explore. Thus, a new insight may be arrived
at.
I feel that this study would be useful to all categories of people to understand the concept
well against the fight of coronavirus. Knowing all aspects of this pandemic would not only
allow people to be more aware of the situation going on, moreover it will provide them
measures to fight with this ongoing issue. Therefore, I feel this study has fallen appropriate in
every parameter which finds it useful to publish on a public platform. It will help people in
the best possible way.
5. OBJECTIVE OF THE STUDY
BASIC OBJECTIVES :

to understand the impact of COVID-19 on Indian economy whether it is positive or
negative

to ascertain the health and safety measures adopted to fight against this pandemic

to let people be aware of facts and findings related to the same

to break down all myths about measures taken to fight against COVID-19
OTHER OBJECTIVES :

to study the awareness of doctors and health workers about health and safety in the
workplace

to clarify the role of government in implementing health and safety

how to overcome this situation economically

to suggest ways to normalize the economic activities to bring back the spark in the
country

to give suggestions to improve health and safety in the economy
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6. HYPOTHESIS
I am taking this DISSERTATION study to collect data for the following areas :
HYPOTHESIS 1. NEGATIVE IMPACT OF COVID-19 ON INDIAN
ECONOMY
HYPOTHESIS 2. POSITIVE IMPACT OF COVID-19 ON INDIAN ECONOMY
I am going to find and include all the information for the above-mentioned areas.
7. LIMITATIONS OF THE STUDY
1. This study is being prepared during the tough times of coronavirus pandemic.
Therefore, the study is totally based on secondary data collection.
2. All the data used in this study has been taken from secondary sources so the data may
or may not be reliable.
3. It is an academic study so it has cost, time and resources constraints.
4. I could include only few data in each topic as we have length constraint as well.
5. As it is an educational study, I could give explanation of few data related to every
area in each topic.
Despite the above limitations, I tried to give the best I can.
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RESEARCH METHODOLGY

This study aims to find the positive and negative impact on Indian economy situation
due to covid-19 pandemic. The study includes impact on social, economic, emotional
and most importantly health sector.

This study is based on secondary data collection, but based on reliable websites,
aiming to understand the various impact of COVID-19 on Indian economy, whether it
is positive or negative. All the data collection was done through internet, books,
magazines, newspapers, etc.

All the data including tables and charts are taken from the best possible reliable
source after verification of the authenticity of information. Thus, making this study
capable of providing reliability.

As this study is being done during the covid-19 pandemic, the possible source of data
collection was secondary. But it is taken utmost care to keep the study rational and
reliable.

But it has certain limitations as it is an educational study so it has cost, time and
resources constraints. Despite of it, I tried including all the relevant points required to
make this study reliable to the best possible extent.
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REVIEW OF LITERATURE
The literature review for this study was conducted during the ongoing COVID-19 pandemic
as of July 2020. The primary focus of the literature is addressing the impact of ongoing
COVID-19 pandemic on the economy of India, with a focus on the economic recession,
increase in unemployment, growing health complexities, etc. This chapter provides a brief
overview of the key changes in the economy of India due to the coronavirus pandemic.
Coronavirus disease (COVID-19) is an infectious disease caused by a newly discovered
coronavirus. The impact of the same is not hidden from any country in the world. This
pandemic has affected an economy in many ways. Economic impact of the 2020 coronavirus
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".
India's growth for FY2021 is been on its lowest in three decades since India's economic
liberalization in the 1990s. This will perhaps be India's worst recession since independence.
Unemployment rose on an alarming rate as millions of people lost employment because
salaries were cut for many others due to no production in lockdown period.
Major companies in India have temporarily suspended or significantly reduced operations.
Young start-ups have been impacted as funding has fallen. Fast-moving consumer goods
companies in the country have significantly reduced operations and are focusing on
essentials. Stock markets in India posted their worst loses in history.
The Government of India announced a variety of measures to tackle the situation, from food
security and extra funds for healthcare and for the states, to sector related incentives and tax
deadline extensions.
In India the life versus livelihood debate also played out, with the government first
announcing that life would be prioritized over livelihood, which later changed to an equal
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importance being given to life and livelihood. By mid-May the centre was keen to resume
economic activities, while the Chief Ministers had mixed reactions.
This pandemic has some positive impact too such as cleanliness of nature, recovery of ozone
layer, a drastic fall on the unnecessary expenses, development of hygiene habits etc. This
pandemic taught us there are many things without which we can survive. Many of jobs can be
done from for which extra set-up is not required which can cut down the costs. Digitalization
has improved in a great way. It became the only way of doing work as of now which led to
development. All the jobs are being done from home safety through digitalization. Schools
colleges are doing their job online. Except some jobs all work can be done over internet
which is a great realisation during this pandemic.
In this study we are going to find out the details in depth to have a full knowledge of positive
and negative impact of this pandemic on Indian economy.
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ANALYSIS AND DESCRIPTION
NEGATIVE IMPACT OF COVID-19
COVID-19 : A HUMAN DISASTER
The covid-19 epidemic is the first and foremost human disaster in 2020. More than 200
countries and territories have confirmed effective medical cases, caused by coronavirus
declared a pandemic by the WHO. Recent growth rate case globally has accelerated to more
than 12,00,000 covid-19 confirmed cases and more than 66,000 deaths till April 1, 2020.
As we have already acknowledged that India is a developing economy, it is stated as an
economy passing through demand depression and high unemployment, with 21-day
lockdown announced by Prime Minister Narendra Modi on March 23, 2020, it would
slowdown the supply-side, accelerating the slowdown further and jeopardising the economic
wellbeing of millions.
With an increasing number of coronavirus cases, the government has locked down transport
services, closed all public and private offices, factories and restricted mobilization. Based on
recent studies, some economists have said that there is a job loss of 40 million people (MRD
report) in the country, mostly in the unorganized sectors.
In this scenario, they are predicting that India would go into recession affecting the
unorganized sector and semi-skilled jobholders losing their employment. It may also likely
surface that at this time of eroding trust within and between countries – with national
leadership under pressure from growing societal unrest and economic confrontations between
major powers if we refer to the times of Ebola crisis in Africa.
The labour sector under the MGNREGA, 2005 are worst impacted as they are not provided
jobs due to lockdown, most of the labour sectors are associated with the construction
companies and daily wage earners. Travel restrictions and quarantines affecting hundreds of
millions of people have left Indian factories short of labour and parts, just-in-time supply
chains and triggering sales warnings across technology, automotive, consumer goods,
pharmaceutical and other industries.
If we refer to the recent measures announced by the government and the RBI to mitigate the
impact of the pandemic, as said by the RBI governor, these are only for short term and may
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not deliver the desired results as the problem is severe and has been further aggravated by the
lockdown.
The quarterly GDP growth has consistently fallen since Q4 of FY18. If there is a deviation in
Q4 of FY19, it is because the National Statistical Office (NSO) revised its data on February
28, 2020, drastically cutting down growth rates in the first three-quarters of FY19 (from 8%
to 7.1% for Quater1; from 7% to 6.2% in Quarter 2 and 6.6% to 5.6% in Quarter 3.
Referring to the recent happenings and data, the unorganised sector excluding this likely to
suffer a great downfall in the coming days as the job generation is going down in an alarming
rate with the prolonged lockdown and weak GDP.
With the commencement of 2020-21 financial year the effects of coronavirus have affected
the stability of the economy of 150 countries - jeopardising their lifestyle, economy,
impacting business and assumption of common wellbeing which we had taken for granted.
The lockdown has adversely have affected service sector like banks, restaurants, food
vendors, and food delivery providers at par with providing health safety and medical
sustenance, we should also have to think about the health of the sickening economy by
mobilizing the resources and make plans of job creation and job continuity.
Economic impact of the COVID-19 pandemic in India
Date
March 2020
Type
Global recession
Cause
COVID-19 pandemic-induced market instability and lockdown
Outcome

Sharp rise in unemployment

Stress on supply chains

Decrease in government income
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
Collapse of the tourism industry

Collapse of the hospitality industry

Reduced consumer activity

Plunge in fuel consumption. Rise in LPG sales.
10.1.2. SECTORAL IMPACT
A. RESTAURANTS SERVICES :
The National Restaurant Association of India (NRAI), which represents 500,000-plus
restaurants across the country, has advised its members to shut down dine-in operations
starting Wednesday till March 31, 2020. This will impact operations of thousands of dine-in
restaurants, pubs, bars and cafes. By extension, food delivery platforms such as Swingy and
Zomato that are by itself functioning -- have also taken a big hit. Orders on Swiggy and
Zomato have dropped 60 per cent amid the pandemic. Since restaurants are closed for a long
time, restaurants owners were also not able to pay salaries to their staff for several months.
The workers working in these restaurants became jobless as there is no work no salary. It led
to drastic economic situation for the people of this sector. They didn’t have any other source
of income which arose the difficulty for the basic need of food for them.
B. FOOD AND AGRICULTURE :
The food and agriculture sector contributes the highest in GDP i.e. 16.5% and 43% to the
employment sector. The major portion of the food processing sector deals with dairy (29%),
edible oil (32%), and cereals (10%). India also stands number one in dairy and spices
products at a global scenario (export).
The supply of the food and Agri product will be affected in the coming seasons due to low
sowing of the upcoming seasonal crops which will affect the mandi operations as said by the
Ministry of Agriculture. The companies which deal with Agro-chemical depend on export for
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finished goods and import of raw materials. The food retail with the Central government and
State governments allowing free movement of fruits and vegetables. The Bricks and Mortar
grocery retail chains are operating normally but with the shortage of staff is impacting
operation.
A study during the first two weeks of May by the Public Health Foundation of India, Harvard
T H Chan School of Public Health and the Centre for Sustainable Agriculture found that
"10% of farmers could not harvest their crop in the past month and 60% of those who did
harvest reported a yield loss" and that a majority of farmers are facing difficulty for the next
season. Due to logistical problems following the lockdown tea estates were unable to harvest
the first flush. The impact of this on the second flush is not known. The entire Darjeeling teabased tea industry will see significant fall in revenue. Tea exports could see a yearly drop up
to 8% as a result. In March 2020, tea exports from India fell 33% in March as compared to
March 2019. During the lockdown, food wastage increased due to affected supply chains,
affecting small farmers.
From 20th April, under new lockdown guidelines to reopen the economy and relax the
lockdown, agricultural businesses such as dairy, tea, coffee, and rubber plantations, as well as
associated shops and industries, reopened. By the end of April, ₹17,986 crore (US$2.5
billion) had been transferred to farmers under the PM-KISAN scheme. Odisha passed new
laws promoting contract farming.
It is expected that with prolonged lockdown the demand for the food supplies will increase.
The online food grocery, on the other hand, suffers a huge loss due to the restriction of
delivery vehicles. With the shortage of labour, the food processing units are facing a hunch in
normal function but the government is trying to ease out the situation until that the factories
have to adjust to working with low labour count. A major destination in the grapple of covid19 for the next few months the Indian export is impacted due to low consumer demand the
export-oriented commodities like seafood, mangoes, grapes are crashing this will impact the
future crop availability.
C. MSME SECTOR :
This sector contributes 30% to 35% of the GDP, showing a bifurcation of micro (99%),
small (0.52%) and medium (0.01%) enterprise. If we see the sectorial distribution of
MSMEs, it shows 49% from rural and 51 % from the semi-urban and urban areas.
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Maharashtra, Uttar Pradesh, Bihar, Tamil Nadu, and Madhya Pradesh have the highest
number of registered MSMEs, a study by the AIMO estimated that about a quarter of over 75
million is facing closure if the closure goes beyond four weeks and if the lockdown still
extends the situation would worsen affecting the employment of 114 million people affecting
the GDP.
Consumer goods, garments, logistics are facing a sharp drop in the business and the MSMEs
engaged in the service sector are still operating, however, is likely to isolate due to plunging
liquidity constrains and purchasing capacity.
Sectors which depends on import such as electronics, pharma, consumer durables etc are
facing a downfall causing a huge rapture across the value chain. There is shortage of
availability of goods as well. As a splash of relief came the RBI announcement of a threemonth moratorium on repayments of loan and reduction in the repo rate as most of the
MSMEs depends on the loan funding from the government.
D. ONLINE BUSINESS / INTERNET BUSINESS SECTOR :
The online business in today's economy plays a major role in the economy with a market
share of USD 950 billion. It contributes 10% to the Indian GDP and showed a drastic fall in
the employment sector in the FY19 viz 8%. Its major segments are the household and
personal care products (50%), healthcare segment (31%) and the food and beverage sector
(19%).
Amidst the social distancing due to threat of covid-19 the tendency of the consumers to
overstock on essential products and commodities viz rice, flour and lentils has risen up. This
gave rise in the sales of the FMCG companies which it saw fall in the stock in trade due to
distorted supply chain. The e-commerce sector saw a dip in growth with pressure on the
supply chain deliveries and the expectations of the consumers on the companies to come up
with newer distribution channels focusing on direct to customer routes. In this soaring
environment the managing and predicting of demand will play a vital role in the customer
relation sector. Categorizing the commodities into part i.e. essential commodities and nonessential commodities showed different responses in the market.
27 | P a g e
The key notable points are:
 Daily essentials categories are massive 200% hike in searches driven by hygiene and
healthcare needs.
 Lifestyle categories sales witnessed a drop between 15% to 30% with an increase in
consumer price sensitivity.
 Purchase growth skewed to family vs individual purchases.
 Increase in searches skewed to brand agnostics.
 Non-essential commodities faced an extreme downfall due to the lockdown as people
were restricted to step out of house. Another reason of it can be the down purchasing
power of the consumers.
E. EXPORTS AND IMPORTS :
India’s exports in April 2020 fell by -36.65% year-on-year, while imports in April 2020 fell
by -47.36% as compared to April 2019.
India's exports fell across numerous sectors in April 2020 as compared to the same period last
year
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F.
ENERGY :
Night lights and economic activity are connected. In Delhi, night light radiance fell 37.2%
compared to 1–31 March 2019. This was the biggest fall for any metro in India. Bangalore
fell 32% while Mumbai dropped by 29%. India's fuel demand in April 2020 as compared to
the previous year fell nearly 46%. Consumption of fuel was the lowest since 2007. Cooking
gas (LPG) sales rose ~12%. An International Energy Agency report in April estimated India's
annual fuel consumption will decline 5.6% in 2020. Diesel demand will drop ~6%. By the
first half of June 2020, India's fuel demand was 80-85% of what it was before the lockdown.
However, the Indian oil minister said that it would take a much longer time for the growth in
demand to be restored to pre-covid levels.
Oil prices dropped sharply in 2020 following the COVID-19 pandemic. Demand also fell
sharply. By mid-May India had already filled its strategic storage including storing oil on
ships across the world. India is now looking at storing oil in other nations including America.
India also plans to increase its local strategic storage capacity for oil.
G. MANUFACTURING :
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 temporarily suspended or significantly reduced operations in a number of
manufacturing facilities and factories across the country. iPhone producing companies in
India also suspended a majority of operations. Nearly all two-wheeler and four-wheeler
companies put a stop to production till further notice. Many companies have decided to
remain closed till at least 31st March such as Cummins which has temporarily shut its offices
across Maharashtra. Hindustan Unilever, ITC and Dabur India shut manufacturing facilities
except for factories producing essentials. Foxconn and Wistron Corp, iPhone producers,
suspended production following the 21-day lockdown orders.
H. STOCK MARKETS :
On 23rd March 2020, stock markets in India faced worst losses in history. SENSEX fell 4000
points (13.15%) and NSE NIFTY fell 1150 points (12.98%). However, on 25th March, one
day after a complete 21-day lock-down was announced by the Prime Minister, SENSEX
posted its biggest gains in 11 years, adding a value of ₹4.7 lakh crore (US$66 billion) for
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investors. On 8th April, following positive indication from the Wall Street that the pandemic
may have reached its peak in the US, the stock markets in India rose steeply once again. By
29th April, Nifty held the 9500 mark.
Impact of COVID-19 on National Stock Exchange of India NIFTY 50 (1 Jan 2020 to 19 May
2020). "The NIFTY 50 is NSE's benchmark broad based stock market index for the Indian
equity market."
Indices: S&P BSE 500 (Period Jan - 2015 to May - 2020). Open, High, Low, Close visible.
Fall depicted in black. Rise depicted in white.
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I.
E-COMMERCE :
In the third week of March, Amazon announced that it would stop sale of non-essential items
in India so that it could focus on essential needs. Amazon followed the same strategy in Italy
and France. On 25th March, Walmart-owned Flipkart temporarily suspended some of its
services on its e-commerce platform and would only be selling and distributing essentials.
BigBasket and Grofers also ran restricted services, facing disruptions due to the lockdown.
Delhi Police began issuing delivery agents curfew passes to make it easier for them to keep
the supply chain open. E-commerce companies also sought legal clarity related to defining
"essentials".
J.
DEFENCE :
The Department of Military Affairs led by the Chief of Defence Staff postponed all capital
acquisitions until the coronavirus pandemic recedes. No new major defence deals would be
made in the beginning of the financial year 2020–21. While the delivery of S-400 missile
systems won't be affected, the delivery of Rafale fighter jets was reported to maybe being
affected. However on 24th March, France confirmed that there will be no delay in the
delivery of the 36 Rafale jets.
In May, the Chief of Defence Staff General Bipin Rawat again emphasized the need for India
to minimize costly defence imports and boost domestic production.
During the announcement of the economic package, the Finance Minister announced a
change in the FDI cap from 49% to 74% for defence, the corporatization of India's ordnance
production and a list for the ban of select defence imports.
K. STATE INCOME AND EXPENDITURE :
State governments incurred huge losses to the extent of having to cut capital expenses as well
as government plans in the near future and finding alternate ways to pay salaries. The Delhi
government has fallen 90% short in tax collection as compared to 2019 and is planning to
take loans and raise taxes in certain sectors. Maharashtra put a hold on all new capital works
till March next year; spending under government development schemes has been reduced by
67% for the current fiscal. The income of the Madhya Pradesh government has fallen by 85%
in April and borrowing has increased.
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The Delhi government as well as the Andhra Pradesh government imposed a 70%-75%
"corona" extra tax on liquor. Excise duty on liquor is the third largest source of income for a
number of states, nearly 10-15% of total tax collection for some states. The ban during the
lockdown affected alcohol sales, in turn having a major effect on the state revenue.
L. SUPPLY CHAINS AND LOGISTICS :
Following the lockdown, certain essential supply chains broke down. Britannia Industries,
supporting the lockdown, urged the government to ensure inter-state movement of the raw
material for the food processing industry was not hampered. The Managing director of
Britannia stated that "if even one link in the supply chain is broken, the country could run out
of stocks of packaged food in the next 7-10 days." Although inter-state travel has been
banned, it doesn't apply to essentials, and in places like Maharashtra the state police are yet to
streamline the process, disrupting supply chains. Vidya Krishnan writes in The Atlantic that
due to the lockdown even movement of medical goods were affected.
On 29th March, the government allowed the movement of all essential as well as nonessential goods across the country during the lockdown. The milk and newspaper supply
chains are also allowed to function.
M. SALARIES :
The Prime Minister on 19th March urged businesses and high-income segments of society to
take care of the economic needs of all those who provide them services. During the live
telecast, he also appealed to families to not cut the pay of domestic help. Following the
lockdown, the government circulated advisories and directives ordering companies to keep
paying employees among other things.
A few days later worries grew as to how wages could continue being paid and if the directive
was legal or not. There were also concerns raised by migrant workers regarding the
implementation of the orders as many daily-wagers have no records of being sacked or
salaries being paid or deducted; the concerns also expand to uncertainty in the government's
ability to enforce minimum wages under lockdown when it couldn't even do so during normal
times.
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On 15th May, the Supreme Court announced that the government should not take "coercive
action" against employers for not paying wages during the lockdown. The court was
commenting on 29th March government order.
N. MIGRANT WORKERS AND LABOUR FORCE:
Due to the lockdown, daily-wage workers (the urban poor and migrant laborers) were left
with no work. At the same time, the lockdown restrictions put a stop on the movement of
buses and trains. Large numbers of migrant workers ended up walking back to their villages.
Soon after a central government directive in late March, state governments set up 21,000
camps to house over 660,000 migrants and stop the exodus. Over 500 hunger relief centres
were set up by the Delhi government by the last week of March. By 5th April, 75 lakhs
people were being provided food across the country in food camps run by the government
and NGOs. As of 12th April, 37,978 relief camps and 26,225 food camps had been set up.
Migrants in such camps in Kerala were provided with medical essentials such as masks,
sanitizers, and medicines.
Soon after the nationwide lockdown was announced in late March, FM Sitharaman
announced a ₹1.7 lakh crore (US$24 billion) spending plan for the poor. This consisted of
cash transfers and steps to ensure food security. To help provide jobs and wages to workers,
the average daily wages under the MGNREGA were increased to ₹202 (US$2.80) from the
earlier ₹182 (US$2.60), as of 1st April. On 14th May, FM Sitharaman further announced
free food grains for the migrant workers, targeting 80 million migrant workers by spending
₹35 billion (US$490 million).
Railways transported 48,00,000 migrants back to their homes in the special trains allocated
for them between 1 and 27 May.
While this service was not initially free, with additional charges over the normal fares, the
central government later made the Railways offer an 85% subsidy on the train fares, and the
state governments funded the remaining 15%. In the same time period, a total of 91 lakh
migrants travelled on both trains and buses.[284]
The governments of Uttar Pradesh, Madhya Pradesh and Gujarat sought to temporarily revise
their labour laws in early May with the purpose of attracting industries and investments.
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Labour unions criticized this as being harmful to the migrant workers while giving more
authority to the employers.
On 20th June 2020, the government launched the Garib Kalyan Rojgar Abhiyaan for the
welfare of migrants.
O. CENTRE AND STATE COLLABORATION
Numerous centres versus state tussles have taken place during the COVID-19 pandemic,
having a socio-economic impact other that the immediate political impact. Some tussles are
not directly related to the pandemic such as the Telangana Chief Minister over the Electricity
(Amendment) Bill. Other tussles are directly related to the impacts of the pandemic such as
the exodus of migrants. Liquor became another source of dispute. Some states have had
disputes with the centre related to how the lockdown should be implemented.
The Modi government, in view of the coronavirus pandemic, suspended Members of
Parliament Local Area Development Scheme (MPLADS) for two years. This action has been
called problematic in many ways, including causing a centralisation of power, being antifederal in nature, and having an affect on local level development and MP influence at micro
levels of the society to handle distress. There have been calls for halting the ₹20,000 crore
(US$2.8 billion) redevelopment of the central vista project in Delhi instead.
During the exit of the lockdown there has been a lack of centre and state collaboration as well
as with local authorities. This has been visible in the handling of migrant labour; now that
companies are restarting, there is a labour shortage.
Above points stated mostly the negative impact of the lockdown, but we would miss out
something if we do not acknowledge the growth of digital infused technological gain. With
the advent of the lockdown most of the sector shifted their functioning online the MNC are
utilising their work from home option to carry on an uninterrupted working.
While these trends were already in the baby steps, they were forced to hit the fast-forward
button. The digital world got such a push that the small retail sectors like the Bricks and
Mortar stores are also using apps like PayTM and other digital channels. The education sector
is now completely based on the digital platforms. The colleges and universities are
conducting their routine classes being in the comfort of their home with various online
platforms such as google classrooms, zoom, etc. They are also introducing new software to
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their curriculums such as digital campus where the students can access their college library,
fee payments, online exams etc. This present crisis has highlighted the importance of
investing in technologies like cloud data and cyber security, self-service capabilities, and egovernance.
10.1.3. GREATEST EMERGENCY SINCE INDEPENDENCE
In India up to 53% of businesses have specified a certain amount of impact of shutdowns
caused due to COVID-19 on operations, as per a FICCI survey in March. By 24th April, the
unemployment rate had increased nearly 19% within a month, reaching 26% unemployment
across India, according to the 'Centre for Monitoring Indian Economy'. Around 140,000,000
(14 crores) Indians lost employment during the lockdown. More than 45% households across
the nation reported an income drop as compared to the previous year. Various business such
as hotels and airlines cut salaries and laid off employees. Revenue of transport companies
such as Ola Cabs went down nearly 95% in March-April resulting in 1400 layoffs. It was
estimated that the loss to the tourism industry will be ₹15,000 crore (US$2.1 billion) for
March and April alone. CII, ASSOCHAM and FAITH estimate that a huge chunk of the
workforce involved with tourism in the country faces unemployment. Live events industry
saw an estimated loss of ₹3,000 crore (US$420 million).
A number of young start-ups have been impacted as funding has fallen. A Data Labs report
shows a 45% decrease in the total growth-stage funding (Series A round) as compared to Q4
2019. According to a KPMG report venture capital in Indian start-ups has fallen over 50% in
Q1 2020 from Q4 2019.
Government revenue has been severely affected with tax collection going down, and as a
result the government has been trying to find ways of reducing its own costs. On 10th May
2020, Union Minister Nitin Gadkari said that some states didn't have enough money to pay
salaries in the near future. In April, former Reserve Bank of India chief Raghuram Rajan said
that the coronavirus pandemic in India may just be the "greatest emergency since
Independence", while the former Chief Economic Advisor to the Government of India said in
April that India should prepare for a negative growth rate in FY21.
The Indian economy was expected to lose over ₹32,000 crore (US$4.5 billion) every day
during the first 21 days of the lockdown, according to Acuité Ratings. Barclays said the cost
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of the first 21 days of shutdown as well as the previous two shorter ones will total to around
₹8.5 lakh crore (US$120 billion). Confederation of Indian Industry (CII) had sought an
economic fiscal stimulus package of 1% of India's GDP amounting to ₹2 lakh crore (US$28
billion). The fiscal package and fiscal policies approach is being compared to what has
happened in other countries such as Germany, Brazil and Japan. Jefferies Group said that the
government can spend ₹1.3 lakh crore (US$18 billion) to fight the impact of coronavirus.
Bloomberg's economists say at least ₹2.15 lakh crore (US$30 billion) needs to be spent.
Former CEA Arvind Subramanian said that India would need a ₹10 trillion (US$140 billion)
stimulus to overcome the contraction.
10.1.4. PRE-PANDEMIC SLOWDOWN
India had also been witnessing a pre-pandemic slowdown. Even before the pandemic, since
FY 2018-19, India's growth was falling, 8% in Q4 FY18 to 4.5% in Q2 FY20. In January
2020 itself, well before India's lockdown or reactions to the pandemic, the International
Monetary Fund reduced India’s GDP estimates for 2019 and also reduced the 2020 GDP
forecast. The 2016 Indian banknote demonetisation and goods and services tax enactment in
2017 led to severe back to back disruptions in the economy. On top of this there had been
numerous banking crises such as the Infrastructure Leasing & Financial Services crisis and
government scheme failures such as that of 'Make in India'. There was also a significant
"income crunch" for both rural and urban sectors in the year prior to the lockdown.
10.1.5. RATINGS AND GDP ESTIMATES
On 27th March, Moody's Investors Service (Moody's) revised 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 April 2020,
the World Bank and rating agencies downgraded India's growth for fiscal year 2021 with the
lowest figures India has seen in three decades since India's economic liberalization in the
1990s. On 12th April 2020, a World Bank report focusing on South Asia said that India's
economy is expected to grow 1.5% to 2.8% for FY21. The World Bank report said that the
pandemic has "magnified pre-existing risks to India's economic outlook". In mid-April the
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International Monetary Fund projection for India for the FY21 of 1.9% GDP growth was still
the highest among G-20 nations. Confederation of Indian Industry (CII) estimated that India's
GDP for FY21 will be between 0.9% and 1.5%.
On 28th April the former Chief Economic Advisor (CEA) to the Government of India has
said that India should prepare for a negative growth rate in FY21. On 22 May the RBI
Governor Shaktikanta Das also said India's GDP growth will remain negative in
FY21. Following the announcement of India's economic package numerous agencies
downgraded their GDP predictions for FY21. Ratings agency ICRA downgraded estimates to
-5%, Goldman Sachs also predicted the same estimate of -5%. These revised GDP estimates
signalled a deep recession.
SN
Agency
Estimate
1
Bernstein
-7%
2
ICRA
-5%
3
Goldman Sachs
-5%
4
Nomura
-5%
5
Fitch
-5%
6
SBI
-4.70%
7
CARE Rating
-1.5%-1.6%
State Bank of India research predicts a contraction of over 40% in the GDP in Q1 FY21. For
the states, the total loss due to COVID-19 is estimated at 13.5% of the total Gross state
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domestic product. The Ministry of Statistics released India's GDP estimates for Q4 FY20 at
3.1% while the overall GDP for FY20 is 4.2%. Krishnamurthy Subramanian, the current
CEA, said the GDP growth slowdown to 3.1% in Q4 FY20 is mainly due to the coronavirus
pandemic effect on the Indian economy. The CEA pointed out that the ratings of over 30
countries have also been downgraded.
On 1st June, Moody's downgraded India's sovereign ratings to its lowest grade. Moody's
clarified that while the rating downgrade was happening amid the coronavirus pandemic, "it
was not driven by the impact of the pandemic", rather because of reasons such as "weak
implementation of economic reforms since 2017" and "a significant deterioration in the fiscal
position of governments (central and state)". Moody's rating is now the same as ratings given
by S&P Global Ratings and Fitch Ratings, which also rate India with the lowest investment
grade.
The contraction that India is expected to see in the FY21 will not be uniform, rather it will
differ according to various parameters such as state and sector. Agriculture and government
sectors are likely not to see any contraction.
10.1.6. ECONOMIC DANGER VERSUS HEALTH RISK
"India risks economic hara-kiri [suicide] if lockdown extended for much longer." (11 May
2020). Lockdown extensions aren't just economically disastrous, as I had tweeted earlier, but
also create another medical crisis" (25 May 2020), said Anand Mahindra.
In March, Adar Poonawalla, CEO of Serum Institute of India said that "the economic danger
of the outbreak was exponentially greater than its health risks". On 29th April, Indian
billionaire NR Narayana Murthy said that if the lockdown continues, India may see more
deaths due to hunger than from the pandemic.
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10.2 POSITIVE IMPACT OF COVID-19
While the fear of the novel coronavirus pandemic is still spreading, air pollution and noise
pollution are significantly decreasing. On the one hand, people are staying indoors to avoid
chances of contamination. On the other hand, sightings of migratory birds, and endangered
species of animals have become daily updates on social media. The novel coronavirus may be
claiming victims all across the globe and keeping people sealed indoors due to the spiralling
fear and mass confusion, it seems so have certain positive effects in India as well as abroad.
10.2.1. BIG OPPORTUNITY FOR THE INDIAN ECONOMY
The Reserve Bank of India and the government will have to act quickly as a united front.
Think tax cuts, increased liquidity, forbearance to lenders, credit and credit-guarantee to
SMEs, and lower interest rates.
The post-COVID-19 scenario for India does not look as grim as most people deem it to be
according to leading economists of the country. Combined with a stimulus package of $100120 billion, it will restore the purchasing power to the populace sooner than earlier deemed
during the onset of the COVID-19 crises.
If India takes a leaf out of the pages of the US and Singapore economies and trusts the
indigenous businesses, the economic recovery will be much sooner for the country.
10.2.2. FALLING DEMAND OF FUEL
As of the beginning of April, the state fuel retailers in Delhi sold around 17% less petrol and
25% less diesel in March 2020, as compared to March 2019.
This comes after the initiation of a country-wide lockdown, where all major transportation
have been stopped to control and contain the spread of the novel coronavirus. Private vehicles
on the roads is a rare sight as well. By the second week of March 2020, local prices of petrol
and diesel were down by INR 4.55 and INR 4.70 per litre in Mumbai.
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Economists expect diesel and petrol prices to drop further as crude oil prices hit a 13-month
low in India. The crude oil prices in the US are falling steadily and the cost might average out
at $43 per barrel in 2020 in contrast to $64 per barrel in 2019. A $1 drop in crude oil prices
will correspond to a reduction in the country’s import bill by a sharp INR 2,900 crore. The
falling rates of crude oil will leave more liquid cash in the hands of the vehicle owners by the
end of 2020. However, economists also state that there is a good chance that the state and
central governments will increase the duty on fuels to make up for the revenue deficits.
10.2.3. CRIME INCIDENTS HAVE BECOME RARER
Crime rates in Delhi and Gurugram have plummeted in the last one month after the COVID19 fear almost paralyzed the cities.
Delhi police have registered only 2,000 cases including petty theft, robbery and automobile
theft since March 15, 2020. It represents a sharp 42% drop-in crime rates in the capital of
India. The drop-in crime rates correspond to the reduction in the percentage of vehicle thefts,
which has given some mental peace to owners of personal and commercial vehicles some
mental peace in these tumultuous times. A similar drop in crime rates has also been witnessed
across other major cities like Kolkata, Chennai, and Mumbai. The Prime Minister’s decision
of a complete lockdown for 21-days and the vigilance by the local law enforcement has
contributed significantly to the steep decline in the crime rate in several cities and towns.
10.2.4. THE AIR IS CLEANER AND THE ENVIRONMENT IS GREENER
Greenhouse gas emissions and pollution levels across the country have fallen significantly.
Half a year ago Delhi was gasping for a breath of fresh air saw ―positively alpine‖ air quality
a couple of days ago. Delhi is currently enjoying one of the lowest air pollution levels seen in
the past decade or longer. The same is true for other metropolitan cities like Mumbai and
Kolkata.
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10.2.5. BOOSTING LOCALISM
Up until the beginning of 2020, it was all about internationalization and globalization of
businesses. Right now, it's all about staying home, inquiring about the health of your
neighbours, leaving home only to buy locally and boosting the local community.
This lockdown has inspired family-time and local-time among the millions of citizens living
in the metros of the country. While people are rarely leaving their homes, if at all, they are
spending more time on streaming platforms, playing board games with their family and
spending quality time with their kids.
10.2.6. WILDLIFE IS REJUVENATING
Apart from sighting the occasional leopard on the streets of quasi-urban Maharashtra and
spotting flocks of flamingos in Navi Mumbai, other wildlife including that of mountain goats,
bison, wild cats, fishing cats, civets and birds.
Migratory birds are returning to lakes and water bodies they had once abandoned due to
heavy pollution and human intervention.
Nature is healing while people restrict their movement outdoors and vehicles retreat to
garages and depots.
10.2.7. IMPROVING ENVIRONMENT
Almost all large projects in India impact the environment adversely. It is now mandatory for
all project appraisals to get environmental clearances before project implementations can
begin. The complete lockdown has helped improve the environmental conditions in the
country considerably. This is likely to impact future project implementations positively.
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10.2.8. SOME EMERGING SECTORS
a) Agriculture: Indian GDP continues to depend on Agriculture. Nearly 20% of India’s GDP
comes from the Agriculture sector. The agricultural production has largely remained
unaffected by the CORONA Pandemic. (Except for lack of manpower during the harvesting
season of the Rabi crop). In fact, Rabi crop production in the country is likely to be 3% more
than the last year. Thus, we shall see little disruption in the agriculture sector that shall
contribute to stabilizing the GDP figures for India.
b) Health Care : Health care sector is obviously going to find a lot of traction in the weeks
and months ahead. For all the negative publicity of poor health care services in India in the
western media, the sector has done reasonably well in handling the current pandemic
effectively. Whether it is testing the potential cases, or isolating the suspects or treating the
confirmed COVID patients, India has done quite well till now. Of course, the situation has
been effectively supported by strong administrative action of the complete lockdown of the
country, thereby keeping the number of people affected by the Pandemic relatively quite low.
This effective management of the COVID pandemic is likely to show the Indian health care
sector in the positive light across the world. It is expected that this shall result in a substantial
increase in health tourism in India. The prices of simple procedures like angioplasty or
bypass surgery are at least 20 times higher in the western world. India is already attracting a
lot of patients from the middle east and South Asia region. Given the right impetus and
proper communication and publicity, the Indian health care sector is capable of attracting
many more health tourists from across the world. This is the right time for India to push for
this.
c) Pharmaceutical: Indian Pharma industry has already made its mark on the global scene.
Thanks to the demand for the Hydroxychloroquine from across the world, Indian Pharma
industry is now been seen as robust and extremely cost-effective. Companies like the Serum
Institute of India have tied up with Oxford to mass-produce the vaccine developed by them.
This Vaccine is considered to be the first in line to effectively stem the COVID virus. Many
other Indian Pharma majors are collaborating and investigating the COVID Vaccine. Soon
multiple solutions shall emerge that shall herald the Indian pharma industry to the top of the
global business.
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d) Digital Platform based Economic Activities : Social Distancing and Work from Home is
going to be the new normal. Going into crowded markets is increasingly going to be difficult.
All this is going to move most of the economic activities across the world towards Digital
Platforms. Ecommerce based activities shall gain much traction and many more activities that
were done in the physical world shall find newer platforms for delivery. Take for example
entertainment. Concept of going to Movie halls shall be a thing of the past. Most of the
entertainment shall be delivered at the doorstep over the OTT platforms. All this shall require
immense computing powers, Bandwidths and Computing professionals. This is where India
has its strengths and the Indian IT industry should find more business in the changing digital
economy.
e) E-Commerce : Given the social distancing measures and lockdown of most of the
crowded markets commercial activity is going to shift online. Thus, e-commerce business
shall pickup. Companies like Amazon, Flipkart and others will see enhanced sales and
contribute to the GST kitty of the central government.
f) Mines & Minerals : Mining activity in the country has remained unaffected by the global
pandemic. Except for the disruption during the lockdown period, when the mining production
stopped; the sector shall spring back to its original production capacities, once the lockdown
is lifted. This sector shall continue to contribute to the GDP figures for 2020.
g) Education : The education sector in the country shall continue to grow. One positive
impact of the loss of jobs will be that a large number of job seekers shall now decide to
utilize the current slump in enhancing their skills and marketable education levels. Thus, all
kinds of postgraduate studies in the country shall see higher rates of admission. Online
education platforms shall see exponential growth and the sector will perform better after a
few months of a slump.
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h) Stock Market Trading: All the global stock market indices have slumped over the last
quarter. A lot of shareholder value has been eroded due to the stock market crashes.
However, it also now presents an opportunity to make profits from the stock markets. After
the lockdown is over and the normal economic activity begins, the only direction the slumped
markets can go is upwards. There is an opportunity for smart investors to make money in the
stock market now.
i) Bullion Business: As the stock market and the global crude prices slumped the bullion
prices shot up. There is money to be made in the current market where the bullion (Especially
Gold) prices have gone up.
So, we see that there are several sectors that shall spring back to their original levels of output
quickly after the lockdown. There are other important factors that shall help rebuild Indian
economy faster than most of the other major economies of the world. Not everything about
the novel coronavirus pandemic is abysmal as we can see from the above instances.
Like every other pandemic, this too shall pass, but not without exacting its toll. In the
meantime, self-isolation during this extended period of lockdown can become a tinsel bit
more bearable when we manage to focus on the positive impacts the COVID-19 pandemic
has brought to India and the rest of the world!
10.3. GOVERNMENT ACTIONS
10.3.1. GOVT CONCERNS AND COMMENTARY :
There were concerns as to where would the government find the funds to fight coronavirus
and keep the economy alive. Experts suggested measures such as looking into NPA norms,
tax payments and income support to those in the unorganised sectors. A direct cash transfer
scheme for the most vulnerable is also being considered, as has happened in other countries.
On 8th April 2020, the managing director of Bajaj Auto, Rajiv Bajaj, wrote in an opinion
piece in the Economic Times that the "lockdown makes India weak rather than stronger in
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combating the epidemic," and that the current "arbitrary" lockdown was totally unsustainable
and a "recalibration" is needed. Rajiv Bajaj writes that "India may have to sell itself out of the
coronavirus crisis". Post the economic package, Barbara Harriss-White criticised the "shock
tactics" of the Modi government during the covid-19 pandemic, the same "shock tactics" that
were seen during demonetization.
The Press Information Bureau brought out a fact check that stories about a financial
emergency being imposed in India are fake. A financial emergency has never been imposed
in the history of India as yet. Numerous companies are carrying out measures within their
companies to ensure that staff anxiety is kept at a minimum. Hero MotoCorp has been
conducting video townhall meetings, Tata Group has set up a task force to make working
from home more effective and the task force at Siemens also reports on the worldwide
situation of the COVID-19 pandemic.
10.3.2. GOVERNMENT PHILOSOPHY :
Globally in a poll by the 'Edelman Trust Barometer', out of the 13,200+ people polled, 67%
agreed that "The government’s highest priority should be saving as many lives as possible
even if it means the economy will recover more slowly"; that is, life should come before
livelihood. For India, the poll showed a ratio of 64% to 36%, where 64% of the people agreed
that saving as many lives as possible was a priority, and 36% agreed that saving jobs and
restarting the economy was the priority.
In India the life versus livelihood debate also played out, with the government first
announcing that life would be prioritized over livelihood, which later changed to an equal
importance being given to life and livelihood. By mid-May the centre was keen to resume
economic activities, while the Chief Ministers had mixed reactions.
Prime Minister Modi announced the first 21 days of India's lockdown on 24 March. During
this address to the nation he said, "Jaan hai toh jahaan hai" (transl. Only if there is life there
will be livelihood). On 11th April, in a meeting with the Chief Ministers of India, the Prime
Minister said "Our mantra earlier was jaan hai toh jahaan hai but now it is jaan bhi jahaan bhi
(transl. Both, lives and livelihood matter equally)". On 14th April, another address to the
nation was made by Modi in which he extended the lockdown, with adjustments, to 3rd May.
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In the Prime Minister's fifth meeting with the Chief Ministers on 11th May, the Prime
Minister said that Indians must prepare for the post coronavirus pandemic world, just as the
world changed after the world wars. During the meeting Modi said "Jaan se lekar jag tak"
(transl. From an individual to the whole of humanity) would be the new principle and way of
life. On 12th May, the Prime Minister addressed the nation saying that the coronavirus
pandemic was an opportunity for India to increase self-reliance. He proposed the
Atmanirbhar Bharat Abhiyan (Self-reliant India Mission) economic package.
10.3.3. TIMELINE :
 On 19th March the formation of the COVID-19 Economic Response Task Force was
announced by Prime Minister Narendra Modi during his live address to the nation. The
task force was led by the finance minister Nirmala Sitharaman. Though not formally
constituted or no official date for relief packages being made, the consultation process
with concerned parties had begun immediately. The Ministry of Finance immediately
started consultations with the RBI and ministries to take stock of most affected sectors
like aviation, hospitality, and MSMEs.
 On 21st March 2020, the Union cabinet approved incentives worth ₹40,995 crore
(US$5.7 billion) for electronic manufacturing.
 Various state governments announced financial assistance for the poor in the unorganised
sector. On 21st March, the Uttar Pradesh government decided to give a direct money
transfer of ₹1,000 (US$14) to all daily wage laborers in the state and the following day
Punjab announced ₹3,000 (US$42) each for all registered construction workers in the
state. On 23rd March, it was announced that Haryana labourers, street vendors and
rickshaw pullers will be provided an assistance of ₹1,000 per week directly deposited
into their bank accounts. Below Poverty Line families would be provided rations
(including rice, wheat, mustard oil, sugar) free of cost for the month of April.
 On 24th March, in his address to the nation, the Prime Minister announced a ₹15,000
crore (US$2.1 billion) fund for the healthcare sector.
 On 24th March, the Finance Minister made a number of announcements related to the
economy such as extending last dates for filing GST returns and income tax returns. The
due dates for the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019, customs
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clearances and for compliance matters under the Customs Act and associated laws was
extended to June 2020.
10.3.4. LOCKDOWN PHASES :
A.
Lockdown Phase 1 (25th March – 14th April) :
 On 25th March, the Modi government announced the world's largest food security scheme for
800 million people across the country. Cabinet Minister Prakash Javadekar made the
announcement in a press conference that the ration would be 7 kg every month (which would
include wheat at a cost of ₹2 (2.8¢ US) per kg and rice at ₹3 (4.2¢ US) per kg.).
 On 25th March, the Uttar Pradesh government banned the manufacture and sale of pan
masala, stating in the order that "spitting pan masala can help in spreading Covid-19".
Following this, other states such as Andhra Pradesh, Rajasthan and Gujarat also banned
spitting in public places.
 On 26th March, the Finance Minister announced a number of economic relief measures for
the poor. ₹170,000 crore (US$24 billion) will fund the Pradhan Mantri Garib Kalyan Yojana
which will provide both cash transfer and food security; with the aim that no one goes hungry
amidst the lockdown. Pradhan Mantri Ujjwala Yojana beneficiaries will get free cylinders for
at least three months. This will benefit over 80 million Below Poverty Line families. The
government would expedite payment of the first instalment (₹2,000) due in 2020–21 in April
itself under the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN). For the organised sector
worker, the government will pay the Employees’ Provident Fund (EPF) contributions of both
sides for 8 million employees of small companies who earn up to ₹15,000 a month. The raise
in the threshold from ₹100,000 to ₹10 million for triggering insolvency proceedings under
the Insolvency and Bankruptcy Code (IBC) was done to help MSMEs. State governments
were given various instructions and guidelines such as diverting district mineral funds for
health needs relating to the pandemic.
 On 26th March, India participated in the virtual 'Extraordinary G20 Leaders’ Summit'. The
G20 nations decided to inject over $5 trillion into the global economy to counteract the
pandemic's impacts. They agreed to work together, to strengthen the World Health
Organisation, develop a vaccine and make it available. They decided to share timely and
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transparent information, materials for research and development and data. Besides expanding
manufacturing capacity for medical supplies, they agreed to ensure smooth flows of critical
supplies.
 On 27th March, the Reserve Bank of India (RBI) Governor Shaktikanta Das made a number
of announcements including EMIs being put on hold for three months and reducing Repo
Rates. Other measures introduced will make available a total ₹374,000 crore (US$52 billion)
to the country's financial system. Delhi government announced that from the 28th they will
be providing free food to 400,000 every day. Over 500 hunger relief centres have been set by
the Delhi government.
 On 27th March, the Rajasthan government decided to deduct the salaries of all its officers and
employees from one to five days, with the money going into the Chief Ministers Fund.
 On 28th March, the Prime Minister launched a new fund called PM CARES fund for
combating coronavirus-like situations.
 On 30th March, it was announced that the UP government would transfer ₹611 crore (US$86
million) to 2,715,000 workers under MNREGA scheme.
 On 1st April the RBI announced more measures to deal with the economic fallout of COVID19.[58] WMA and short-term liquidity was increased to provide relief to state governments;
exporters have also been granted some relief in the form of relaxed repatriation limits.
 On 2nd April, the World Bank approved US$1 billion emergency financing for India to tackle
coronavirus labelled 'India COVID-19 Emergency Response and Health Systems
Preparedness Project'.
 On 3rd April, the central government released ₹17,287 crore (US$2.4 billion) to different
states to help combat coronavirus. The Ministry of Home Affairs approved ₹11,092 crore
(US$1.6 billion) for states as relief under the State Disaster Risk Management Fund.
 On 6th April, a 30% salary cut for one year was announced for the President, Vice President,
Prime Minister, Governors, Members of Parliament and Ministers. It was also decided to
suspend the MPLADS for two years and transfer the money, about ₹7,900 crore (US$1.1
billion), into the Consolidated Fund of India.
 On 8th April, the Department of Expenditure, Finance Ministry, allowed states net market
borrowings of ₹320,481 crore (US$45 billion) between April to December. ₹3,000 crore
(US$420 million) of funds under the PM Garib Kalyan Yojana were given to over 20 million
workers engaged in construction work by the various states and UTs. To provide relief to tax
payers amid the COVID-19 crisis, the government decided to release ₹18,000 crore (US$2.5
billion).
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 On 10th April, the Asian Development Bank (ADB) assured India of ₹15,800 crore (US$2.2
billion) assistance in the COVID-19 pandemic fight.
 On 14th April, at 10 am, the Prime Minister made a public speech in which he announced the
extension of the nationwide lockdown, as well as a calibrated reopening. "From the
economy's point of view, the lockdown undoubtedly looks costly right now, but compared to
the lives of Indian citizens, it is nothing" (translation, original in Hindi). A new set of
guidelines for the calibrated opening of the economy and relaxation of the lockdown were
also set in place which would take effect from 20th April.
B.
Lockdown Phase 2 (15 April – 3 May) :
 On 15th April, as part of the new lockdown 2.0 guidelines, the Ministry of Home Affairs
announced, among other things, that all agricultural and horticultural activities will remain
fully functional. Information technology companies can function with 50% staff. The partial
lift of restrictions would take place from 20th April.
 On 17th April, RBI announced more measures to counter the economic impact of the
pandemic including ₹50,000 crore (US$7.0 billion) special finance to NABARD, SIDBI, and
NHB.[16] Providing more relief to state governments, WMA limits have been increased by
60 per cent.
 On 18th April, India changed its FDI policy to protect Indian companies from "opportunistic
acquisitions" during the COVID-19 pandemic.
 On 20th April, limited economic activity is expected to resume outside of the COVID-19
containment zones. During this selective relaxation of restrictions, numerous activities will
remain prohibited such as educational institutions, passenger movement by trains, cinema
halls, malls, shopping complexes and gymnasiums. Telangana was the first state to extend the
lockdown to 7th May, beyond the national lockdown date of 3rd May.
 On 21st April, it was announced that a team from "The Technology Information, Forecasting
and Assessment Council" (TIFAC)" under the Department of Science and Technology are
preparing a white paper on the revival of the India economy. TIFAC has a "mandate to think
for the future".
 On 23rd April, The Kerala government has decided to defer one month's salaries of
employees. The government will reduce the salaries of all categories of government
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employees including teachers, university officers and employees in all PSUs, equivalent to
six days’ worth salaries every month.
 On 23–24 April, banks from the Shanghai Cooperation Organisation (SCO) agreed upon a
"joint roadmap for economic recovery".
 On 25th April, the Ministry of Home Affairs allowed the re-opening of some shops under
certain restrictions. As per the "national directives for COVID-19 management", liquor and
other shops would remain closed. These relaxations do not apply to hotspots.
 On 28th April, the ADB approved a ₹10,500 crore (US$1.5 billion) loan to India to combat
the pandemic. The Punjab government formed a group of experts for reviving the economy
following the pandemic led by Montek Singh Ahluwalia and with former Prime Minister Dr.
Manmohan Singh to provide guidance.
 On 4th May, India went into its third stage of lockdown. The country was divided into various
zones (green, orange, red, containment) and as per the zone the economy has been opened up.
C.
Lockdown Phase 3 (4–17 May) :
 On 5th May, Maharashtra put a hold on capital works till March next year and imposed a 67%
cut in development spend for 2020–21. This is the largest cut in expenditure since the state
was formed.
 On 7th May, in a telephonic conversation with Indian External Affairs Minister, the Minister
for Foreign Affairs, Japan "requested cooperation for the resumption of activities by Japanese
companies in India." Japan has around 1400 companies in India.
 On 11th May the Prime Minister, in a meeting with the Chief Ministers, asked the Minister's
to each come up with a plan for resuming activity following the third extension of the
lockdown on 17th May. The Prime Minister emphasized the need to start reopening the
economy, while some of the Chief Ministers had their doubts related to the nature of
relaxations.
D.
Lockdown Phase 4 (18–31 May) :
 On 20th May, the Cabinet of India cleared some proposals of the economic package,
including a free food grain package and collateral free credit for MSMEs.
 On 22nd May, the RBI Governor held an unannounced press conference in which he
extended the moratorium on loans and cut repo and reverse repo rates among other things.
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The RBI Governor said that food inflation will be a stressor, but added that the forecast for
normal monsoons and positive growth in the next quarter would be a positive, and that "the
combination of fiscal, monetary and administrative measures will create conditions that will
enable a gradual economic revival going forward." RBI also allocated funds for Exim Banks
and an extension to SIDBI. The measures were a result of the meeting of the Monetary Policy
Committee on 22 May.
 On 25th May, domestic flights resumed with limited operations.
 On 30th May, new lockdown guidelines were announced by the Ministry of Home Affairs
which would come into effect in a phased manner from 1st June onwards. Many of the new
guidelines "have an economic focus".
E.
Unlock 1 :
 On 1st June, Delhi allowed all industries and markets to reopen including barber shops and
salons; curfew time changed to 9pm to 5am while educational institutes were to remain
closed. Numerous public utilities, businesses and activities such as gymnasiums, cinema halls
and the Delhi Metro to remain closed.
 On 2nd June, mobile manufacturing incentives were offered by the government to mobile
manufacturers. This included a ₹50,000 crore (US$7.0 billion) production-linked incentive
on goods made locally in India. Five Indian firms would also be selected for the scheme.
 On 8th June, religious places, malls and restaurants were permitted to open all over India,
expect in the containment zones.
 On 20th June, the Garib Kalyan Rojgar Abhiyaan was launched to tackle the impact of
COVID-19 on migrant workers in India. It is a rural public works scheme with an initial
funding of ₹50,000 crore (US$7.0 billion) covering 116 districts in 6 states.
10.3.5. ATMANIRBHAR BHARAT ABHIYAN :
On 12th May, the Prime Minister, in an address to the nation, said that the coronavirus crisis
should be seen as an opportunity, laying emphasis on domestic products and "economic selfreliance", an Atmanirbhar Bharat (transl. Self-reliant India) through a Atmanirbhar
Bharat Abhiyan (transl. Self-reliant India Mission). The following day the Finance Minister
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started laying out the details of the Prime Minister's vision which would continue into the
next few days. The Finance Minister stated that the aim was to "spur growth" and "selfreliance", adding that, "self-reliant India does not mean cutting off from rest of the
world". The law and IT minister, Ravi Shankar Prasad, also said that self-reliance does "not
mean isolating away from the world. Foreign direct investment is welcome, technology is
welcome [...] self-reliant India... translates to being a bigger and more important part of the
global economy." Shashi Tharoor called the 'Self-reliant India Mission' a repackaged version
of Make in India.
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10.3.6. ECONOMIC PACKAGE ANNOUNCEMENTS (12–17 MAY) :
India's overall economic package was announced as ₹20 lakh crore (US$280 billion), 10% of
India's GDP. The package, though announced on 12 May by the Prime Minister, included
previous government actions, including the RBI announcements. The previous RBI
announcement included around ₹ 8 lakh crore (US $ 110 billion) liquidity. the economic
package also included the Finance Minister announcement of a package totalling ₹
170,000 crore (US$ 24 billion) on 26th March. The strategy of combining fiscal and
monetary, liquidity measures was defended by the government. Sitharaman explained that
other countries had also done the same. Estimates of the size of India's fiscal stimulus as a
percentage of GDP varied between 0.75% to 1.3%. The Finance Minister, for five days,
between 13th and 17th May, held press conferences in which the details of the economic
package were explained.
 On 12 May the Prime Minister announced an overall economic package worth ₹20 lakh
crore (US$280 billion), adding that the fourth phase of the lock down will be different
with new rules.[95] This Rs 20 lakh crore includes the previous government packages (Rs
1.7 lakh crore) as well as the RBI decisions (Rs 5-6 lakh crore). They make up about 40%
of the package.[96]
 On 13 May the Finance Minister, Nirmala Sitharaman, and the Minister of State for
Finance and Corporate Affairs, Anurag Thakur, elaborated on the financial package that
was announced by the Prime Minister the day before.[97] The definition of MSMEs was
revised, which allows more companies to avail the benefits of MSME schemes.[98] The
announcements on the first day also included collateral free loans and bank guarantees
that would allow resumption of work for many MSMEs. For non-bank lenders a liquidity
scheme and partial credit guarantee scheme. Tax deadlines were extended.[98]
 On 14 May the Finance Minister, for the second day, continued announcing the details of
the economic package. Migrants, farmers, street vendors among others were covered in
the package and the "One Nation One Ration Card" scheme was emphasized.
 On 15 May the Finance Minister, for the third day, continued the announcement of the
economic package.[101][102] Operation Greens was extended from tomatoes, onion and
potatoes (TOP) to all fruits and vegetables.[103] Cereals, edible oils, oil seeds, potato and
onion were deregulated (except in exceptional circumstances) and no stock limit shall
apply for storage as was proposed Amendment in Essential Commodities Act
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(1958).[104] Matsya Sampada Yojana was announced for fisheries and animal husbandry
infrastructure fund was announced.[105] Agri-infrastructure fund, agricultural marketing
reforms for farmers and fair price legal framework support for farmers were among other
things covered.[105]
 On 16 May the Finance Minister, for the fourth day, continued the announcement of the
economic package.[106] A fund for farm-gate infrastructure was announced, amendments
to the Essential Commodities Act, as well as the opening up of the defence sector, power
sector and space sector for privatization. While not all the measures in the package
provided immediate relief, the Finance Minister said that the immediate needs of the
country had also been addressed.[107]
 On 17 May the Finance Minister concluded the announcement of the economic package.
Size of India's fiscal stimulus (estimates)
SN
1
Entity
Goldman
Sachs
Fiscal cost as % of GDP
1.3
2
Motilal Oswal
1.3
3
BofA
1
4
Kotak
1
5
Bernstein
0.9
6
Nomura
0.8
7
Barclays
0.75
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The economic package consisted of a mix of reforms, infrastructure building, support to
stressed businesses and a certain amount of direct cash support. The "collateral-free loans"
that the package provided aimed to "resume business activity and safeguard jobs". Changes in
FDI policy, privatization of the power sector, provident fund contribution and ease of doing
business measures were also announced. Land reforms at the state level which were not
mentioned in the economic package are also part of the overall change
Reports though stated the economic package did not address short term demand concerns,
which may in turn pull down the economy even more; with most of the announcements being
related to supply. It was also reported by economists such as Sonal Varma, Nomura Global
Market Research, that "long pending politically sensitive reforms" have been pushed through
during this time and with this package. While the economic package was criticised on various
fronts, it was also given neutral to positive responses on other fronts such as for the necessary
caution the government showed in its spending.
10.3.7. PROTECTIONISM :
On 18th April 2020, India changed its foreign direct investment (FDI) policy to curb
"'opportunistic takeovers/acquisitions' of Indian companies due to the current pandemic",
according to the Department for Promotion of Industry and Internal Trade. With the fall in
global share prices, there is concern that China could take advantage of the situation, leading
to hostile takeovers. While the new FDI policy does not restrict markets, the policy ensures
that all FDI from countries that share a land border with India will now be under scrutiny of
the Ministry of Commerce and Industry.
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10.4. POSITIVE OUTLOOK TOWARDS NEAR FUTURE
India has so far managed to keep a relatively flatter infection curve in its battle against the
pandemic. When compared to other countries, it does appear to have a better chance of
pulling off with lesser collateral damage, at least for the time being. However, several factors
are already playing in, or might play out, during the course of these events, and these might
prove to be favourable for India to become a major trade and commerce player in the world.
An outsourcing hub. The global economic slowdown will mean that first world economies –
such as the US – will be looking out for low-cost outsourcing solutions. Whether it is IT,
finance or non-core items, India can rise up to the challenge.
A. AN OUTSOURCING HUB
The global economic slowdown will mean that first world economies – such as the US – will
be looking out for low-cost outsourcing solutions. Whether it is IT, finance or non-core items,
India can rise up to the challenge.
B. SUPPLY BASKET
Globally, buyers have already shifted to India to source ceramics, home, fashion, and lifestyle
goods. The drive to look for alternatives can be beneficial for India to enter multiple trade
channels as a supplier of raw materials and manufactured goods.
C. A SHIFT IN MANUFACTURING
Around a thousand foreign manufacturers want to relocate their production to India, a country
they see as an alternative to China. Reportedly, at least 300 are already talking with the
Indian government for production in a wide range of sectors, including electronics, medicine,
and textiles. Impact? Infrastructural development around manufacturing facilities and a boost
to employment.
D. SUPPORTING THE CAUSE
This year, the government has proposals to hike import duties on more than 300 products,
such as an increase of 30 percent in furniture import from the current 25 percent price. This
can provide an opportunity for local production to break out within the market, especially
OMEs, SMEs, and even the ever-so-varied handicrafts of India.
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E. DEPENDENCIES AND ACTIONS
Much of the world has had China as its resource, assembly and manufacturing hub, especially
in the case of electronics and mobile accessories. However, given the source of pandemic and
actions taken over it, the world is paying a heavy price. There is no easy way to put it: the
pandemic has instilled a shift in consumer psychology, and the outcome will be an altered
behaviour towards the market, especially China and its products. However, before India leaps
to fill this global void, it needs to cut the shackles of its dependencies. India has had an overreliance on Active Pharmaceutical Ingredients (APIs) supplied from China. The shutdown of
supply chains, however, has called for a need to shift the market or become independent.
Thankfully, the government has planned to boost local production of these APIs and emerge
as a global alternate supplier.
For a long time, China has been in the top of India’s imports list for a variety of items. It is no
denying that, given the pandemic, the supply has been hit hard. But the Indian government is
already exploring alternative countries for over 1,000 items to replace China as their supplier.
F. OTHERS

Digital & Internet Economy: Online based products & services companies will find new
takers

Ed-tech and Online Education along with firms involved with online-skill development

Online groceries

There will be a sudden spike in the demand for Content, with digital content being in
demand more than ever.

FMCG & Retail will benefit immensely. With continued fear, food-based retail chains, and
companies catering to low-ticket consumption demand will emerge as winners.

Speciality Chemicals: Firms dealing in Chemicals will see a jump due to increased demand
for disinfectants, drugs and medicines.

Pharma: Pharmaceutical firms are set to see growth in the near term.
Undoubtedly, there are many hitches to overcome, some which will require other countries to
lift themselves up from the pandemic before entering trade negotiations. Future, however is
difficult to predict, but anticipating where a single seed can be planted to bear a massive fruit-
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bearing tree is what we need to do. The COVID-19 pandemic will, undoubtedly, continue to
keep us all on our toes until a vaccine comes out. But hope is what we have, so it is what we
shall use.
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Conclusion
As per my observation, I found, a global recession now seems inevitable. But how deep and
long the downturn will be depending on the success of measures taken to prevent the spread
of COVID-19, the effects of government policies to alleviate liquidity problems in SMEs and
to support families under financial distress. It also depends upon how companies react and
prepare for the re-start of economic activities. And, above all, it depends on how long the
current lockdowns will last.
The country is facing an extra ordinary challenging time in this financial year. India has to
urgently find a way to cushion the demand side shocks induced by potential lockdowns and
other ongoing containment measure.
Developing countries like India has more fragile economic and social fabric and the present
situation will create more suffering for the unorganized sectors and migrant labour.
Borrowing the words of former RBI governor C Rangarajan ―Government of India must
provide lifelines to businesses - extend loans and tax waivers to small businesses and the selfemployed to retain staff -- give direct support to severely affected industries and provide
more funds to states, tax waivers to households etc.‖
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