Impacts of COVID-19 on Indian Economy

The outbreak of the COVID-19 is continuing, and with 7.76 million confirmed cases till now India has surpassed Brazil. According to the experts, India will face the second wave of COVID-19 with the advent of winter. Although, keeping view of the menace of the second wave of COVID-19, the European countries are taking stringent action to contain the spread of COVID-19. In India, the COVID-19 outbreak not only exposed the public health infrastructure of the country but also pushed the Indian economy into a tailspin.

To mitigate the outbreak of COVID-19 in India, Indian Prime Minister Narendra Modi imposed lockdown across the country that remained in effect until 31 May 2020. Nationwide lockdown was successful in India and it controlled the number of cases of COVID-19 to some extent. But lockdown worsened the Indian economy. The situation became worse for the migrant worker, and they were forced to return to their home. According to the estimation, 10 million migrant workers returned to their native places after the imposition of the lockdown.

COVID-19 and Lockdown Created Serious Trouble for the India Economy

COVID-19 not only created chaos in poor, middle, and lower-middle-class families of India but also economic activity came to a grinding halt in the country. According to the Ministry of Statistics and Programme Implementation, the Indian economy contracted by 23.9% in the April-June quarter of this fiscal year. Since 1996, it was the worst economic decline recorded in the country.

Private consumption and investment play significant role in the economic growth of the country, but due to the COVID-19 and nationwide lockdown, during the first quarter of 2020 private consumption declined by 27% and investment by private businesses fell by 47%. Except the Agriculture sector, all the major sectors of the economy witnessed a sharp decline, especially labour-intensive sectors like construction, real estate, retail trade, transport, and manufacturing contracted sharply during this quarter.

If we talk about the job loss of people in the corona crisis, then according to the data from the private think tank Centre for Monitoring Indian Economy (CMIE), around 6.6 million white-collar professionals these include engineers, software engineers, physicians, teachers, accountants, and analysts lost their jobs after the COVID-19 lockdown.

The Economic Impact of COVID-19 on Different Sectors in India

The travel and tourism industry of India is facing a huge crisis due to the outbreak of COVID-19. According to the Confederation of Indian Industry (CII) and hospitality consulting firm Hotelivate, the entire value chain linked to the industry is likely to lose around 5 lakh crore or the US $65.57 billion.

According to the CII-Hotelivate research, currently, Indian hotels are facing a revenue loss of 80-85%. The branded and unbranded hotels in India will incur a revenue loss of $19.31 billion.

To contain the spread of COVID-19, the metro rail services across the country were suspended from 25 March 2020. According to the Union Housing and Urban Affairs Minister Hardeep Singh Puri, during the lockdown period Delhi, Bengaluru, Lucknow, Chennai, and Kochi Metro Rail Corporation reported a combined loss of almost Rs 2,000 crore.

Due to the outbreak of COVID-19, Indian Railways had suspended all passenger services from March till May 3, 2020. During a web conference, the chairman of Indian Railway, Mr. Vinod Kumar Yadava expects to incur a revenue loss of around Rs 40,000 crore.

COVID-19 Pandemic has disrupted the education sector of the country. Due to the nationwide lockdown since March, people are forced to stay at their home. Where many children from town and cities are struggling to keep up with the challenges of online classes, the same students from villages are deprived of the resources.

The COVID-19 pandemic and the lockdown created serious trouble for the street vendors. They not only lost their established business but also many of them returned to their villages.

The hotel and restaurant industry are also facing a serious challenge in this time of crisis. To be considered as recession free industry, the sector has witnessed a staggering loss of about ₹1trn ($13bn) in the last three months. Now in cities when restrictions have been lifted, the hotel and restaurant industry is not running with full capacity. Due to the COVOD-19 pandemic, people prefer home-made food. Due to such changing habit of people, food delivery platforms such as Swiggy and Zomato have also faced a massive blow in their business. Orders on Swiggy and Zomato have dropped 60 percent amid the pandemic.

Now the work on vaccine development is going on at the battle level, and definitely, the world will get an effective vaccine to prevent COVID-19 in 2021. The Government has to spend money on infrastructure development to rejuvenate the nation. Due to COVID-19, India is on the verge of recession, but history has witnessed that every problem has made India stronger and better.