MANAGERIAL ECONOMICS – II

COVID-19
A Modern Economic Disaster....

GUIDED BY: DR. SHIKTA SINGH

PREPARED BY:
Adarsh Kumar (19202133)
Ayan Chatterjee (19202143)
Acknowledgement P Bineeta (19202160)
Subham Chakraborty (19202187)
Vaijayanti Jena (19202194)
We would like to express our special
thanks of gratitude to our Dr. Prof.
Shikta Singh who gave us the golden
opportunity to do this wonderful project
of Managerial Economics-II, and a complete pleasure to work under her guidance.
We were instructed to do the report on how Covid-19 has caused a downfall to the economy
of our country and what are the actual scenarios that might occur in future. While completion
of our project we came to know about so many new things which helped us in proper analysis
of our project.
 TABLE OF CONTENTS

1. INTRODUCTION 4

2. SETTING THE CONTEXT 5

3. LITERATURE REVIEW 6

4. CONCEPTUAL FRAMEWORK 7

5. CURRENT ECONOMIC SITUATION (NATIONAL) 8

6. REMARKS AND RECCOMENDATION FOR FUTURE 9

7. CONCLUSION 10

8. REFERENCES 11
 INTRODUCTION
This year 2020, the headlines changed overnight as people got to know about a virus which
was later named as Corona Virus (COVID-19). It was first noticed in Wuhan, China in the
month of December 2019. It’s believed to be caused by severe acute respiratory syndrome.
Before doing deep in this, first let’s know what’s this term ‘pandemic’ means, it’s basically a
disease that spreads from a place and hits the whole world eventually. Corona virus was
labelled as a pandemic by WHO on March 2020 where more than seven lakh cases have been
registered in over 189 countries and various other territories.
It’s believed that the virus mainly spreads due to close contact and if stay close enough to
people who have cough or they are active to sneezing. The basic symptoms that respond to
the disease are fever, cough and respiratory problems. The basic thing a person can do to stay
safe is by following daily hygiene measures such as washing hands, while sneezing covers
the mouth and finally self-isolate oneself from other people when suspected that one is
eventually infected. At this point it is very important to stop this virus from spreading and
contaminating every citizen of this world by taking strict actions such as restriction on
various travel portals, if needed then curfews, closing every workplace and organization
where there can be gathering of public.
Regularly as we see this pandemic has led to severe global socioeconomic disruption or
cancellation of various sporting events, the Olympics, Cricket IPL 2020, various religious
events, cultural events. It has created a panic situation in the minds of every citizen of the
country he/she belongs where it is seen people are stocking up their daily used commodities
for months to come. One should act sensibly as the Government of India has clearly
mentioned that daily supply of commodities, medicine and other essential goods would be
available for citizen. But due to this excessive it may lead to supply shortage of every goods
as the demand for goods are on peak but if this type of behaviour continues it will lead to
resources crisis. Being a responsible citizen it is our duty to not give ears to any such rumours
that floats in the internet and act as per the fake issues being addressed. As seen currently the
outbreaks have slowed down in China and passed on to big nations such as USA, Europe,
Italy, South Korea, India as well as various other countries in this world map.
It has been predicted till date due to this sudden outbreak it will lower the GDP growth by
over one and half percent i.e. from 2.9 to 2.4. The leading economists even predicted that the
GDP growth could fall to zero in worst case happenings as its currently being heading
forward. It’s very basic that the Covid-19 outbreak has disturbed the economy and it has
shaken the demand and supply curves in the global economy. For which there has been a
result of depression, where the United Nations projects that foreign direct investment could
possibly fall between 5 and 15 percent to their lowest levels since the 2008-2009 financial
crisis that was at the time of global recession. At the sectoral level, the hardest hit would be to
the travel industries as people are following the policy of “social distancing” and every
individual are staying indoors. If we talk now about various sectors such as the aviation
sector could suffer a loss of $64 billion to $112 billion, whereas the international film market
could lose $5 billion in lower box office sales. It is very clear to all of us that this outbreak
has caused and will be causing a huge destruction not just in our personal life but it would
also hamper each and every sector of this economy. It is time for all of us to stand together
and help each other as much as possible.
 SETTING THE CONTEXT
The corona virus problem is growing by the day and spreading more and more countries and
to more and more people but when we talk about the impact of it on India, then it is some
extent towards a threat and to some extent an opportunity.
In China the Hubei Province is completely locked down where this problem was generated
they aren’t allowing people to come in or go out of the province despite the state contains the
virus which is spreading all over, it’s a very important industrial centre affecting large
number of things, this means that china’s exports are badly affected and it cannot export its
goods outside of the country which in turn can be opportunity for India,
as China has always been one of our competitors in exporting a wide variety of items that
India can also export so perhaps there is some scope for India to take that space that China is
being forced to vacate.
This will not be easy because we can’t suddenly build up capacity which does not exist but
there may be an opportunity that as china is not able to export that pace we can occupy which
of course Bangladesh, Cambodia, Mexico and lots of other countries may also move towards
occupying it.
But the extent that space is created, India could also get some advantage and increase our
exports on the other hand we can be badly affected also, one of the reasons is global scale all
travel and tourism is coming down, thus all countries are facing issues in terms of air traffic
and tourism.
Over and above India is a very substantial importer of 60 billion dollars’ worth of materials
from China, this includes electronics and large number of pharmaceutical ingredients, to the
extent that we are unable to get this we may face difficulty in domestic production and in
exports both in electronic items and especially in export of generic drugs.
As 65 to 70% of bulk chemicals come from china, as this is interrupted this may disrupt
domestic production and exports. Fears are that we may run short of a series of drugs and
only putting a ban on exports may lead to meeting domestic demands.
We do not know how long this may go, the longer it is the greater is the damaged and less is
the opportunity that we get. Thus with the increasing damage due to this problem the
economy is also being affected because of the pandemic.
 LITERATURE REVIEW
 Simon Mair (March 2020)- the article deals with the huge shifts in our way of life
being introduced as part of the fight against Covid-19 pave the way for a more
humane economy.
 Arup Roychoudhury (March 2020)- the article deals with the impact of coronavirus in
the months to come and its effects on the Indian economy.
 IMF blog (March 2020)- the IMF explains the economic lessons from china fight
against the coronavirus.
 Matt Craven, Linda Liu, Mihir Mysore, Shubham Singhal, Sven Smit, and Matt
Wilson (March 2020)- the article gives in depth view on the coronavirus implications
in the business, factors related to the same and the steps to be taken currently.
 Prasanna Mohanty (March 2020)- the article deals with the impact of lockdown due
to coronavirus and its implications on the Indian economy.
 PTI United Nations (March 05, 2020)- Trade impact of Coronavirus pandemic in
India and implications in the future.
 Pushkar Mukewar (March, 2020)- Impact on the trade in India due to coronavirus
epidemic and beyond.
 Hugo Erken, Raphie, Hayat, Kan Ji (March 2020)- economic impact of covid-19 in
India.
 Capital economies (April 3, 2020)- the covid-19 coronavirus and its economic impact,
the article depicts the latest updates on the corona virus and chart implications on the
spread of the pandemic and its effects on the economy and asset markets, inclusive of
daily data and changes in the market due to this pandemic.
 IMF (March,2020)- article on statement made by the IMF managing director
Kristalina Georgieva following a G20 ministerial call on the corona emergency.
She emphasized on 3 major points, the outlook of global growth, the advanced
economies are tackling the situation in a better way than the emerging markets with
low income, and lastly states the actions that can be taken for the members.
 Healthcare
Indian domestic pharma industry relies
heavily on import of bulk drugs
With India’s API imports from China,
almost 70% of its consumption by value,
importers are at the risk of supply
disruptions and unexpected price
movements.
For many critical antibiotics and
antipyretics, dependency on imports from
China is close to 100%
These APIs require large capacities of
fermentation boilers, a USP of Chinese
manufacturers, giving an upper hand to
Chinese manufacturers.
 Delivery and tracking of consignments are
still uncertain within China whether
inward or outward.

Automobile
IT Various components from China has
affected both Indian auto
Heavily dependent on manpower and manufacturers and the auto
are not able to operate due to component industry.
lockdown and quarantine issues. As China accounts for around ¾ of
Consequently, they are not able to battery manufacturing capacity.
Around 8-10% contraction in Indian
complete or deliver the existing
auto manufacturing in 2020 could be
projects in time and are also expected.
declining new projects.

Aviation and Tourism Agricultural

The outbreak has forced domestic carriers
to cancel and temporarily suspend flights
operating from India to China, Honk Kong
and other parts of the world.
Carriers such as Indigo and Air India have
halted operations to the places it used to
carry on regular basis.
The temporary suspension of flights to
China and Hong Kong would lead to
domestic carriers missing out on gross
revenue targets.
Disturbance of balance has created due to
the movement of labours and goods.
Due to lockdown most of the farmer fled
to their homes which might affect Rabi
crop and ultimately affecting their
income.
Also the farm machines are stranded on
highways as no one can operate them.
There is shortage of seeds and fertilizers
as the demand and supply points are not
stable.

FIG. CONCEPTUAL FRAMEWORK

 CURRENT ECONOMIC SITUATION (NATIONAL)
The Noble COVID19 has changed the entire economy of the country as it affected all the
sectors and work life. The Indian economy is the fifth largest economy of the world. Let us
discuss some of the major consequences of this effect by Indian perspective. As we are aware
that our monetary policy decision is taken by the Reserve Bank of India (RBI) and our
financial year begins on 1st of April every year all new changes and decisions are taken up in
the first week of April for the new year but due to this Pandemic COVID19 the RBI had held
meeting on 27th of March and decided the road map for the future course of action to control
and revive our economy in this lockdown. The RBI governor Mr Shaktikanta Das predicted a
big global recession and said India will not be immune for this. It all depends how India
responds to the situation.
Now we are going to discuss some of the most prominent steps taken by RBI in this regards
—despite some help from the falling crude prices, food grain prices may soften even further
on record crop production. Aggregate demand may weaken and ease core inflation further,
the liquidity measure announced include auction of targeted long term repo operation of 3-
year tenor for total amount of RS 1 lakh crore at floating rate and accommodation under
marginal standing facility to be increased from 2% to 3% of statutory liquidity ratio with
immediate effect till June 30. These measures will make available a total of RS 3.74 lakh
crore. The government unveiled a RS 1.7 lakh crore package of free food grain and cash
doles to the poor to deal with the economic impact.
The government economic package to fight during COVID19 are:
 5 kg rice and 1 kg dal free for 3 months
 50 lakhs medical insurance for each doctors, nurses and sanitation workers
 Farmers will get RS 2000 as a front load in their account in April with respect to PM
Kishan Yojana.
 MGNREGA income increased from RS 182 TO RS 202 for 5 crore people
 Woman Jan-Dhan account holders will get RS 500 per month.
 Ujjwala beneficiaries will get 3 LPG CYLINDERS for free for next 3 months.
 Government will pay EPF contribution of employees & employers for 3 months.
 Workers can avail 75% of non-refundable EPF advance or 3 months’ wages.
Hence to support the move of the government many people are contributing to PM CARE
relief fund to support as stated in Capital economies (APRIL 3 2020) the COVID19 corona
virus and its economic impact on asset market, inclusive of daily data and changes in the
market due to this pandemic.
The Government, RBI, Finance Ministry all are working on the same page to help the
INDIAN economy now and even after so that our economy can retrieve back and help all our
sector to grow and flourish from after that pandemic effect and strengthen our rupees against
US dollar, our trade import and export that has slipped down, our businesses, industrial
worker etc.
The NBFC is facing cash crunch and even several nationalised banks and our GDP growth
last quarter showed very alarming figure about the health of our economy so by this we can
predict our current economic situation.
 REMARKS AND RECOMMENDATION FOR FUTURE
As per the current scenario Covid-19 has shook the whole world, whereby bringing forward
that vulnerability of health issues of public while fighting this infectious disease or such
pandemics. If we have to take any effective step to avoid such pandemic affect our human
race we should have to be very prepared, response to the immediate situation as well as
recovery at local, national and international levels. Just because we being responsible citizen
have failed to counter the pandemic on the areas it should have been done, Covid-19 has
spread like a wildfire all across countries where lakhs of people are getting affected and
thousands have died.
After seeing all these happenings around us, it surely can act as a wake-up call for everyone
as an individual, a state, a society or a country as a whole. It is known that the life that we
were leading will not be the same after the occurrence of this virus. Our way of thinking will
change to do and accept the things as compared to earlier.
The emergence of Corona virus and eventually spreading to masses is a lesson for
Governments all over the world for ignoring and not conducting proper research in this
infectious disease segment and taking it lightly. Few common examples from recent times
would be Nipah virus, Avian flu, Zika etc., these are examples of signals that we have seen in
present times. With time passing by bacterial infections are becoming prone to antibiotics and
emerging as more dangerous and becoming life threatening.
Economy is driven by how well people get up and work for their countries and governments.
With diseases like these growth stops, economy deteriorates and people are left at the mercy
of chance. Governments should always be prepared for such disasters and keep money in
store for emergencies like these. These relief funds help to counter the bad effects of
pandemics when people are unable to go out from their houses. And most importantly ,
people should take care of their health’s and their environment so that pandemics like these
don’t get to arise or even if they do arise we would be prepared to fight .
 CONCLUSION

It is an undeniable fact that COVID-19 is perhaps the biggest pandemic and disaster to have
arrived since the Spanish flu in 1918. Not only has it claimed countless lives in China but
also all over the world. Beyond the health and lives it has cost, It has also resulted in a
remarkable crash of the economic market and environment. With people under lockdown and
unable to go out of their homes in order to avoid the disease, human work and progress in
almost all sectors have been halted and it has resulted in huge financial loss across all the
segments of the economy. Most importantly trade has halted resulting in isolation and
lowering of income from exports. Recession is surely on the way. Taking everything into
consideration, we should all brace ourselves for a hard next four quarters as the economy has
suffered a terrible setback and will need a good amount of time to revive. We can only hope
is that COVID-19 goes away for good.
 REFERENCES
 https://economictimes.indiatimes.com/markets/stocks/news/coronavirus-its-impact-on-
various-sectors/covid-19-impact/slideshow/74490812.cms
 https://economictimes.indiatimes.com/?from=mdr