A STUDY ON IMPACT OF COVID-19

ON INDIAN ECONOMY
A Project Report Submitted Impartial fulfilment of the
requirements for the award of the
DEGREE OF MASTER OF COMMERCE
By
NISHITA DEY
University Roll no. 190506454602
Regn. no. KU1407589
Class Roll No: 13
Session : 2018-2020
Under the Supervision of :
DR. SUSHILA SUSAREN HANSDA
Asst. Professor, Department of Commerce
The Graduate School College for Women

KOLHAN UNIVERSITY,
Chaibasa

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 A STUDY ON IMPACT OF COVID-19
ON INDIAN ECONOMY
A Project Report Submitted Impartial fulfilment of the
requirements for the award of the
DEGREE OF MASTER OF COMMERCE
By
NISHITA DEY
University Roll no. 190506454602
Regn. no. KU1407589
Class Roll No: 13
Session : 2018-2020
Under the Supervision of :
DR. SUSHILA SUSAREN HANSDA
Asst. Professor, Department of Commerce
The Graduate School College for Women

THE GRADUATE SCHOOL COLLEGE FOR WOMEN

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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
NISHITA DEY, a student of M.COM., session 2018-2020,
impartial fulfillment of the requirement for the award of
the degree of MASTER OF COMMERCE. This is an original
work done by the candidate under my supervision and
guidance.

PROJECT GUIDE:
DR. SUSHILA SUSAREN HANSDA
ASST. PROFESSOR
DEPARTMENT OF COMMERCE
THE GRADUATE SCHOOL COLLEGE FOR WOMEN
SAKCHI, JAMSHEDPUR

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 KOLHAN UNIVERSITY, Chaibasa
ACKNOWLEDGEMENT

I would like to express my special thanks of gratitude to the almighty for giving
me the strength to complete this research paper. A heartful thanks to my
professor DR. SUSHILA SUSAREN HANSDA 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.

Thanking you,
NISHITA DEY
M.COM. SEMESTER IV
Session 2018-2020

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5|Page
 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.

EXECUTIVE SUMMARY

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1. Introduction……………………………………………………….……….7-9
2. Background and History of Covid-19…………………………….…….10-14
3. Statement of Problem…………………………………………………...15-
16
4. Significance of the Study…………………………………………….…….17
5. Objectives of the Study…………………………………………………….18
6. Hypothesis……………………………………………….………...……….19
7. Limitations of the Study………………………………………………........20
8. Research Methodology……...
…...................................................................21
9. Review of Literature................................................................................22-23
10. Analysis and Description
10.1. Negative Impact of Covid-19
10.1.1. COVID-19 : A Human Disaster......................................24-
25
10.1.2. Sectoral Impact...............................................................26-
35
10.1.3. Greatest Emergency since Independence........................35-
36
10.1.4. Pre-Pandemic
Slowdown.....................................................36
10.1.5. Ratings and GDP Estimates............................................36-
38
10.1.6. Economic Danger versus Health
Risk..................................38
10.2. Positive Impact of COVID-19
10.2.1. Big Opportunity for the Indian
Economy.............................39
10.2.2. Falling Demand of Fuel...................................................39-
40
10.2.3. Crime Incidents have become
Rarer.....................................40
10.2.4. The Air is Cleaner and the Environment is
Greener.............40
10.2.5. Boosting localism............................................................40-
41
10.2.6. Wildlife is
rejuvenating .......................................................41
10.2.7. Improving
Environment.......................................................41

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 10.2.8. Some Emerging Sectors..................................................41-
43
10.3. Government Actions
10.3.1. Government Concerns and
Commentary.............................44
10.3.2. Government Philosophy..................................................44-
45
10.3.3. Timeline..........................................................................45-
46
10.3.4. Lockdown Phases............................................................46-
50
10.3.5. Atmanirbhar Bharat Abhiyan..........................................50-
51
10.3.6. Economic Package Announcements...............................52-
54
10.3.7. Protectionism.......................................................................54
10.4. A Positive Outlook towards Near Future..................................55-
56
10.5. Conclusion......................................................................................5
7
10.6. Bibliography...................................................................................5
8
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

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−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 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:

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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 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 2019-2020. 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.

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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 :

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).

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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.

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

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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 COVID-19 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.

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

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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.

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 self-employed 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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State/Union Territory Cases Deaths Recoveries Active

Andaman and Nicobar

4,207 58 3,945 204
Islands

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

Chhattisgarh 172,580 1,738 146,222 24,620

Dadra and Nagar Haveli

3,220 2 3,167 51
and Daman and Diu

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

Jammu and Kashmir 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

Manipur 16,777 132 12,562 4,083

Meghalaya 8,801 79 7,091 1,631

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 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

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

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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.
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.

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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
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.

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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.

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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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8. 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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9. 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

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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.

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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10. ANALYSIS AND DESCRIPTION
10.1 NEGATIVE IMPACT OF COVID-19
10.1.1. 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

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only for short term and may 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

 Sharp rise in unemployment

Outcome
 Stress on supply chains

 Decrease in government income

 Collapse of the tourism industry

 Collapse of the hospitality industry

 Reduced consumer activity

 Plunge in fuel consumption. Rise in LPG sales.

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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 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 tea-based tea industry will see significant fall in revenue. Tea

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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 covid-19 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.
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

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came the RBI announcement of a three-month 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 non-essential commodities showed different
responses in the market.
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.

30 | P a g e
 India's exports fell across numerous sectors in April 2020 as compared to the
same period last year

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

31 | P a g e
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 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."

32 | P a g e
Indices: S&P BSE 500 (Period Jan - 2015 to May - 2020). Open, High, Low,
Close visible. Fall depicted in black. Rise depicted in white.

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.

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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.
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.

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On 29th March, the government allowed the movement of all essential as well
as non-essential 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.
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

35 | P a g e
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. 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 anti-federal 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.

36 | P a g e
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 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 e-governance.

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).

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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 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'.

38 | P a g e
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 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%

39 | P a g e
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 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 $100-120 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

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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.

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 COVID-19 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

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“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.

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.

10.2.8. SOME EMERGING SECTORS

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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.

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

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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.

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.

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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 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,

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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 11 th 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 3 rd
May. In the Prime Minister's fifth meeting with the Chief Ministers on 11 th
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 12 th 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 :

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  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 23 rd 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 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.).

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 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 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.

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 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 COVID-19.[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).
 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

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 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 7 th 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 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) :

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 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 17 th 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. 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

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 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 self-reliance", an Atmanirbhar Bharat
(transl. Self-reliant India) through a Atmanirbhar Bharat Abhiyan (transl. 
Self-reliant India Mission). The following day the Finance Minister 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 "self-reliance", 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.

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 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 (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.

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 Size of India's fiscal stimulus (estimates)

SN Entity Fiscal cost as % of GDP

1 Goldman Sachs 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

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

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 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.
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 over-reliance 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

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 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-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.

10.5. 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 self-employed 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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10.6. BIBLIOGRAPHY
1. "India's economic activity almost at pre-lockdown levels but Covid looms:
Nomura". The Economic Times. 15 September 2020. Retrieved 15
September 2020.
2. Vyas, Mahesh (21 April 2020). "Unemployment rate touches 26%". Centre
for Monitoring Indian Economy (CMIE). Retrieved 24 April 2020.
3. Sharma, Yogima Seth (24 June 2020). "Unemployment rate falls to pre-
lockdown level: CMIE". The Economic Times. Retrieved 24 June 2020.
4. Goyal, Malini (22 March 2020). "Covid-19: How the deadly virus hints at a
looming financial crisis". The Economic Times. Retrieved 23 March 2020.
5. Research, Centre for Policy. "Podcast: How has India's lockdown impacted
unemployment rates and income levels?". Scroll.in. Retrieved 24
April 2020.
6. "Covid-19 lockdown estimated to cost India $4.5 billion a day: Acuité
Ratings". Business Line. 2 April 2020. Retrieved 11 April2020.
7. PTI (25 March 2020). "Experts peg India's cost of coronavirus lockdown at
USD 120 bn". The Hindu @businessline. Retrieved 25 March 2020.
8.  "Lockdown relaxation— more than half of India's economy may reopen
from Monday, says Nomura". Business Insider. Retrieved 18 April 2020.
9. Biman.Mukherji (23 March 2020). "Coronavirus impact: Indian industry
seeks relief measures to aid economy". Livemint. Retrieved 23 March 2020.
10. Chaudhry, Siraj A. (26 March 2020). "Covid-19 puts India's food supply
chain to a stress-test". The Hindu @businessline. Retrieved 26 March 2020.

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11. Das, Goutam (30 March 2020). "136 million jobs at risk in post-corona
India". Livemint. Retrieved 2 April 2020.
12.  "Economic cost of lockdown is nothing compared to people's lives: PM
Modi". Business Standard. ANI. 14 April 2020. Retrieved 14 April 2020.
13. "Lockdown hurts economy but saving life is more important: PM
Modi". India Today. 14 April 2020. Retrieved 14 April 2020.
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jahaan bhi', signals a shift in India's coronavirus playbook". Livemint.
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May 2020.

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