The outbreak of Coronavirus disease 2019 (COVID-19), first identified in Wuhan, the capital of Hubei, China, in December 2019 and since then has spread globally, has been recognized as a pandemic by the World Health Organization (WHO) on 11 March 2020.
India is widely affected by this pandemic. As of 29.04.2020, more than 35000 cases of Coronavirus have been confirmed in India with more than 2000 deaths.
The 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 4.1% 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.
Covid-19 will change the way the world works; just like the Great Depression, dot-com bubble, and the 2008 financial crash did in the past. The question on everyone’s mind is, ‘Will things go back to normal?’
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.
According to the survey, COVID-19 is having a ‘deep impact’ on Indian businesses, over the coming month’s jobs are at high risk because firms are looking for some reduction in manpower. Further, it is added that already COVID-19 crisis has caused an unprecedented collapse in economic activities over the last few weeks.
Tedious road ahead for travel & tourism and entertainment
The travel & tourism industry was one of the first sectors to be affected by the outbreak, and most likely will also be the hardest hit.
Oil and natural gas
Due to the fall in travel, global industrial activity has been affected. Oil prices fell further in March as the transportation section, which accounts for 60 percent of the oil demand, was hit due to several countries imposing lockdowns.
In the third week of March, Amazon announced that it would stop the sale of non-essential items in India so that it can focus on essential needs.
Way Forward: Implications for Companies
The pandemic has paralyzed economies, compelling businesses to re-evaluate their strategies. Companies will need to build their financial muscle and focus on developing a lean structure to stir through the uncertain business environment.
FMCG and retail players on a war footing; foodservice and institutional business decimated
Since the imposition of the nationwide lockdown, FMCG companies and retailers are dealing with challenges primarily around three highly interconnected issues: surge in demand & depletion of inventory, reduction in workforce, and supply chain disruption.
Due to lockdowns in China, followed by in the US and Europe, the demand for industrial metals reduced as factories shut down. As per IMF, China accounts for roughly half of the global demand for industrial metals.
Low asset utilization rate in logistics and ports
In essential commodities, the Indian government has taken various measures for swift movement of freight across the country. However, players in the logistics sector are struggling to service needs as supply chains across industries have been disrupted.
COVID-19 : Likely case scenarios for Indian economy
The rampant spread of COVID-19 outbreak, across borders and geographies, has severely impacted almost the whole world and triggered significant downside risks to the overall global economic outlook.
In India, Finance Minister Nirmala Sitharaman has announced some details of the Atmanirbhar Bharat Abhiyan package, to provide relief to Medium, Small and Micro Enterprises (MSMEs) in the form of an increase in credit guarantees.