ECONOMIC IMPACT OF

COVID-19 ON THE STATE OF

ANDHRA PRADESH

Submitted by:
Santhi : 18ECE1027
Hemanth : 18ECE1031
Karun Raj : 18ECE1029
Guna Sneha: 18EEE1006
Yaswanth : 18EEE1031
INDEX:
1. INTRODUCTION
 DOWNFALL IN REVENUE
 COVID-19 BURDEN
 EFFECT ON THE MAJOR SECTORS
2. AGRICULTURAL SECTOR
 AGRICULTURE AND SUPPLY CHAINS
3. INDUSTRIAL SECTOR
 AGRO FOODS
 Biotechnology
 Automobile and Auto Components Industry
 Textiles, Apparels and Leather
 Mines and Minerals
4. SERVICE SECTOR
 Telecommunication
 Tourism
 Healthcare/hospitals
 Information technology
 Real estate
 Education
 MSME
 Transportation
5. CONCLUSION
6.REFERENCE
INTRODUCTION:
The corona virus or covid-19 is a family of viruses that causes a
range of illnesses in humans which are life threatening. With the
increase in covid-19 cases and the death worldwide the world health
organization (WHO) declared the virus outbreak a pandemic in the
second week of march 2020.
The economic impact of corona virus pandemic and subsequent
country wide lockdown has been largely disruptive all over India and
Andhra Pradesh is no exception. The corona virus outbreak has shut
down Andhra Pradesh that was looking to divide its capital among
Vizag, Kurnool and Amaravati.Covid-19 pandemic have left Andhra
facing a ‘grave financial crisis’.
The state government finds itself with little option to overcome
the crisis but looks at the centre for liberal financial help and
statutory measures to help the industry. Chief minister Y.S. Jagan
Mohan Reddy had apprised prime minister Narendra Modi of the
dire situation in the state, during a video conference in April and
asked for liberal financial aid.

DOWNFALL IN REVENUE:
The state’s revenue had reportedly dipped to a mere Rs.2 crore a
day. The revenue shortfall in Andhra Pradesh in the wake of
lockdown was about Rs.5,000 crore a month. While the actual
calculations of the state’s finances and revenue deficit are yet to be
confirmed, sources in the government said revenue receipts in the
financial year 2019-20 were likely to be about Rs.1.04 lakh crore. The
state couldn’t pay full salaries to its staff due to serious financial
crisis.
COVID-19 BURDEN:
Despite the challenges, the government has spent about Rs.1,330
crore on COVID-19 assistance to 1.33 crore white ration card holders
in the state. In addition, it spent Rs.1,400 crore on interest waiver to
women’s self-help groups. The government has also made elaborate
arrangements, including food and accommodation during the
lockdown, for about 70,000 migrant workers across 13 districts. As a
measure of support to industry during the current crisis, the state
has paid Rs.905 crore of industrial incentives to the MSME (micro,
small and medium enterprises) sector. The A.P government is
estimated to have so far spent more than Rs.10,000 crore on covid-
19 related activities, financial assistance and relief measures.

EFFECT ON THE MAJOR SECTORS:

All the four industries are being affected during the lockdown.
One of the biggest export items in A.P was shrimp and marine
products, which has been affected. The MSME sector has been badly
affected. ‘Agriculture’ and export-based sectors are facing big
challenges. There is a great loss in service sector too. The income of
all the state’s retailers selling non-essential items like automobiles,
furniture, jewellery etc., took a great dip. Majority of the companies
are expecting a significant decline in revenue and job losses.
The impact of corona virus on the various sectors can be explained in
detail as follows:

1.AGRICULTURAL SECTOR:
 Lacking regular salaries or incomes, these agriculture, migrant,
and other informal workers would be hardest-hit during the
lockdown period. Here, I focus on the likely impacts on
agriculture, supply chains, food and nutrition security and
livelihoods.
AGRICULTURE AND SUPPLY CHAINS:
COVID-19 is disrupting some activities in agriculture and supply
chains. Preliminary reports show that the non-availability of migrant
labour is interrupting some harvesting activities, particularly in
northwest India where wheat and pulses are being harvested. There
are disruptions in supply chains because of transportation problems
and other issues. Prices have declined for wheat, vegetables, and
other crops, yet consumers are often paying more. Media reports
show that the closure of hotels, restaurants, sweet shops, and tea
shops during the lockdown is already depressing milk sales.
Meanwhile, poultry farmers have been badly hit due to
misinformation, particularly on social media, that chicken are the
carriers of COVID-19.

Here are some measures are required to keep the

agricultural sector and supply chains working
smoothly:
 The government has correctly issued lockdown guidelines that
exempt farm operations and supply chains. But implementation
problems leading to labour shortages and falling prices should
be rectified.

 Keeping supply chains functioning well is crucial to food

security. It should be noted that 2 to 3 million deaths in the
Bengal famine of 1943 were due to food supply disruptions—
not a lack of food availability.

 Farm populations must be protected from the coronavirus to

the extent possible by testing and practicing social distancing.
 Farmers must have continued access to markets. This can be a
mix of private markets and government procurement.

 Small poultry and dairy farmers need more targeted help, as

their pandemic-related input supply and market-access
problems are urgent.

 Farmers and agricultural workers should be included in the

government’s assistance package and any social protection
programs addressing the crisis.

 As lockdown measures have increased, demand has risen for

home delivery of groceries and E-commerce. This trend should
be encouraged and promoted.

 The government should promote trade by avoiding export bans

and import restrictions.

 Using social safety nets as a bridge between health shock and

economic shock

 The lockdown has choked off almost all economic activity. In

urban areas, leading to the widespread loss of jobs and
incomes for informal workers and the poor. Estimates by the
Centre for Monitoring Indian Economy show that
unemployment shot up from 8.4% in mid-March to 23% in the
first week of April. In urban areas, unemployment soared to
30.9% as of April 5. The shutdown will cause untold misery for
 informal workers and the poor, who lead precarious lives facing
hunger and malnutrition.

 The Indian government has quickly responded to the crisis and

announced a $22 billion relief package, which includes food and
cash transfers. Several state governments have announced
their own support packages.

 The central government’s relief package, called Pradhan Mantri

Garib Kalyan Yojana (Prime Minister’s plan for well-being of the
poor), is aimed at providing safety nets for those hit the
hardest by the COVID-19 lockdown. However, it is inadequate
compared to the enormous scale of the problem. Nobel Prize
economists Esther Duflo and Abhijit Banerji say that the
government should have been much bolder with the package’s
social transfer schemes. The $22 billion in spending is only
0.85% of India’s GDP. This is much lower than the packages
passed by the United States, European and some Asian
countries. India should think bigger, and be spending at least
4% to 5% of GDP. The central and state governments must
spend more, even if there is one-time hike in the fiscal deficit.

 Below are some additional measures needed in

addition to the government package:
 Food and nutrition security. Government warehouses are
overflowing with 71 million tons of rice and wheat. In order to
avoid exclusion errors, it is better to offer universal coverage of
distribution in the next few months. Nutrition programs like
Integrated Child Development Services (ICDS), mid-day meals,
 and Anganwadis (rural child care centres) should continue to
work as essential services and provide rations and meals to
recipients at home. Eggs can be added to improve nutrition for
children and women. Several state governments have started
innovative programs to help informal workers and the poor. For
example, the Kerala government is providing meals with
diversified diets at the doorsteps of households.

 Cash transfers. Unemployed informal workers need cash

income support. The government has provided Rs. 500 ($6.60)
per month to the bank accounts of 200 million women via the
Jan Dhan financial inclusion program. But this too is insufficient.
We need to have a minimum of Rs.3000 ($40) per month in
cash transfers for the next three months.

 Migrant workers. There are about 40-50 million seasonal

migrant workers in India. In recent days, global media have
broadcast images of hundreds of thousands of migrant workers
from several states trudging for miles and miles on highways;
some walked more than 1000 kilo meters to return to their
home villages. They should be given both cash transfers and
nutritious food.

COVID-19 is an unprecedented challenge for India; its large

population and the economy’s dependence on informal labour make
lockdowns and other social distancing measures hugely disruptive.
The central and state governments have recognized the challenge
and responded aggressively—but this response should be just the
beginning. India must be prepared to scale it up as events unfold,
easing the economic impacts through even greater public program
support and policies that keep markets functioning.
2. INDUSTRIAL SECTOR:
Government of Andhra Pradesh accords top priority to industrial
development to make Andhra Pradesh a progressive and highly
industrialized state, a State that is a centre of technology and
innovation and a joyous population confident of its bright future. In
this regard, extensive consultations were held with stakeholders,
Industrial Associations namely CII, FAPSIA, FAPCCI, A.P. Spinning Mills
Associations, ALEAP etc. for formulation of new policy. Industrial
Development Policy (IDP) 2015-20 has been prepared to make
Andhra Pradesh most preferred destination for investors by
providing favourable business climate, excellent infrastructure, good
law and order and peaceful industrial relations. The new industrial
policy also focuses on creating a conducive ecosystem which makes
industries based in Andhra Pradesh innovative and globally
competitive. Government of Andhra Pradesh (GoAP) lays utmost
emphasis on sustainable industrial development anchored by
capacity building at the grassroots level.

KEY INDUSTRIES:
Agro Foods
Biotechnology
Automobile and Auto Components Industry
Textiles, Apparels and Leather

Mines and Minerals

AGRO FOODS:
The State government has issued guidelines for the operation of
certain industries and activities with reasonable safeguards
outside containment zones to ensure that essential supplies are
not affected during the lockdown due to COVID 19 and to
mitigate its impact on casual and migrant workers. As per G.O. Rt.
No. 88 dated April 18, industries, both government and private,
involved in manufacture of 25 essential items have been allowed
to operate by duly following health guidelines and social
distancing norms. The exempted units are Agri-based industries
like chilli, turmeric, salt and spices, bakery and confectioneries,
ice plants, fish feed, poultry feed, cattle feed etc.,
BIOTECHNOLOGY:
The A.P. MedTech Zone (AMTZ), touted as India’s largest medical
devices manufacturing park, is hogging the limelight for its
contribution to the fight against COVID-19 pandemic due to its
success in developing rapid testing kits. Further, it is gearing up to
launch manufacturing of ventilators from mid-April. AMTZ will
manufacture rapid testing kits at the rate of 2,000 per day and
later scale it up. It will begin manufacturing 3,000 ventilators
from April 15 and increase it to 6,000 from the subsequent
months.
AUTOMOBILES:
The lockdown has certainly jolted the automobile industry. But this
Ugadi (a festival of telugu states), those who had booked their
vehicles are also in a soup. Despite having paid the booking amount,
they haven’t been able to get their cars. What has exacerbated the
problem is that many had sold their old cars to buy new ones in
order to save on road tax. Motor vehicles rules in Andhra Pradesh
state that people buying a second vehicle have to pay a heftier road
tax. Thus, many have been left without cars amid the lockdown.
Dealers say that not only new vehicles but even those service centres
could not be returned owing to the lockdown. “Our business has
been hit. We are not sure how much we’ll be able to recover after
the lockdown. Our priority will be to deliver the new vehicles as well
as the serviced ones,” said by manager of the showroom.

TEXTILE:
Due to the outbreak of COVID-19, A.P CM Jagan made the following
statement on textile industries to PM, “GST payment may be
deferred till the business becomes normal. Interest-free GST
deferral scheme should be announced for next one year, similar to
VAT, IFST facility,” he said. On textiles, he said in Andhra alone, 2.5
lakh people depend on textiles manufacturing. He requested that
bank interest rate be reduced and soft loans be extended by banks
to the extent of government dues. “Moratorium for repayment of
principal and interest amount to banks for four quarters under the
RBI loan restructuring scheme given for MSMEs may be extended
to all textile units,” the Chief Minister said, adding cotton yarn and
fabrics must be included under Rebate of State and Central Taxes
and Levies, Interest Equalisation Scheme and Merchandise Exports
from India Scheme benefits with immediate effect to save lakhs of
jobs. 
Stating that closure of China, USA and EU markets has impacted
textile exports, Jagan wanted exemption from anti-dumping duty
and basic customs duty for all raw materials, dyes and chemicals,
intermediaries, spares, accessories etc. “For garment exporters,
business losses suffered need to be converted into soft loans and
excluded from the existing working capital limit along with support
to units for wages payment,” he said.
MINING:
For the metals and mining sector, the Chief Minister of AP
requested that funds for projects under the National Infrastructure
Pipeline may be released immediately. He also sought
stimulus/revival packages for strategic sectors such as Real Estate,
subsuming of all levies into GST, relaxation in statutory and
employee-related payments and moratorium for loan repayment.
He felt wage subsidies for labour-intensive mining projects must be
granted in the short-term due to the outbreak to COVID-19.

3.SERVICE SECTOR:
 The service sector is the third of the three economic sectors of
the three-sector theory. The others are the secondary sector
(approximately the same as manufacturing), and the primary sector
(raw materials). The service sector consists of the production of
services instead of end products. Services (also known as "intangible
goods") include attention, advice, access, experience, and affective
labor. The production of information has long been regarded as a
service, but some economists now attribute it to a fourth sector, the
quaternary sector.

During 2018-19, the services sector accounted for a share of

43.6 per cent in the total GVA of the state, followed by agriculture
and allied sector at 33.64 per cent and Industry at 23.38 per cent.
AP’s share in Gross State Value added (GSVA) in 2018-19 stood at 43
per cent. Among 33 States and Union Territories, AP stood at 23rd
place.

The key sectors that come under service sector are as follows:

Telecommunication
Tourism
Healthcare/hospitals
Information technology

Real estate

Education

MSME

Transportation

The detailed analysis of impact of COVID - 19 on important sectors

and the Govt. Policies that are being made and the suggestions given
by economists are as follows:

TELECOMMUNICATION:
More than the impact of COVID-19, the impact created by
central government by selling of BSNL is worst. The services are given
by telecommunication throughout the lockdown. Some companies
are willing to cut the wages while some looking to fire their workers.
Even though this sector is affected by COVID-19, the impact on this
sector is less when we compare with other sectors. Govt. may not
take any policies over this sector because it is not effected much as
stated above.

TOURISM:
The most effected sector all around the globe will be tourism
and Andhra pradesh is not exception. Every year tourists from
foriegn and from other states of the country visit Andhra pradesh.
Even after the lockdown this sector will not see its previous glory for
at least a year. Solely TTD (Tirumala Tirupati Devasthanam) faces loss
of wouping amount Rs.400 crore. Tourisms effect will be shown on
transport sector.

HEALTHCARE/HOSPITALS:
Healthcare facilities has increased during this period. Dr YSR
Telemedicine facility (14410) launched by Chief Minister YS Jagan
Mohan Reddy at a time when the government suspended the
outpatient services in all hospitals due to the outbreak of
Coronavirus, is set to provide relief for those suffering with different
ailments. Officials say that apart from the cases related to the
suspected COVID-19, doctors also give suggestions and prescribe the
required medicines to patients with other ailments. Andhra pradesh
not being a rich state had done vigerous testing in this period and
increased its health care. Even though the salary cut is there for
Government employees, Medical and Health department employees
are exempted from this as their services are valuable in this
epidemic.

INFORMATION TECHNOLOGY:
India's information technology sector has never seen challenging
times that it is witnessing now due to the COVID-19 impact, IT
industry veteran S Mahalingam said on Tuesday even as he lauded
the companies in the space for demonstrating their ability to be
reliable partners during the lockdown period.

"Nothing comes as a comparable thing to what is happening

now. This is the most serious one; impact is going to be phenomenal
because while essentially IT Industry has proved (its capability) but
we have to ensure that global businesses resume, and it's going to
take time and therefore it’s a very challenging time," Mahalingam
said. He added Post the lock-down period, Indian IT firms would see
phenomenal amount of opportunity as companies in general, both
private and government, would have to rethink on their business
environment.

REAL ESTATE:
More than 4,000 real estate projects in big cities and towns in
Andhra Pradesh have come to a standstill due to the Covid-19
lockdown. Experts of the realty market are of the opinion that the
sector may face some challenges over the next few months.

They feel that investment from NRIs (non-resident Indians) may

help the sector out of the crisis, especially in bigger cities such as
Vizag, Vijayawada, Guntur and Tirupati.
 Prices of real estate may go down in some areas once the
lockdown is lifted. The real estate sector has been under pressure for
quite some time now owing to a shortage of sand and other issues.
The situation had just begun to improve when the coronavirus
brought all projects to a complete standstill.

Speaking to TOI, K Subba Raju, Chairman of Credai-Andhra

Pradesh said that the real estate industry is the second largest
contributor to GDP and creates a lot of employment. He said that
nearly 4,000 projects worth crores have got stuck due to the
lockdown. "We think the post-lockdown scenario will be challenging
for the real estate sector for at least a few months. We hope that the
situation improves. There are indications that some NRIs could
return to AP and purchase property," he said.

According to a section of builders, the post-Covid-19 period

would see an insecure job market with revenue sources drying up
and people’s purchasing power declining. As a result, they say, many
may post plans. However, realty prices in cities like Vizag may not
come down, according to B Srinivasa Rao, President of Credai-Vizag
because of increasing construction costs. The proposed shifting of
the secretariat from Amaravati to Vizag has affected an increase in
prices of apartments and land plots in Vizag. The prices have gone up
by Rs 500 to Rs 700 per square feet. While the prices may come
down a little, builders might still find it difficult to sell after the
lockdown.

EDUCATION:
Education will be the sector of the economy hardest hit by an
extended lockdown in the face of the coronavirus pandemic,
according to new analysis. The impact on education is forecast to be
greater even than that on the hospitality industry, which has been
almost entirely closed down by efforts to contain the spread of the
virus. Universities will bear the brunt of the loss, as their income
from tuition fees plunges and international students stay away.
Private, fee-paying schools could be among those to suffer. Many are
resisting reductions in fees, partly by switching to remote teaching,
but parental pressure to offer discounts could prove irresistible,
particularly if the lockdown stretches to the end of the school year.
This could be devastating for schools, some of which are likely to
close as a result, school leaders have warned.

MSME:
The Andhra Pradesh government on Saturday announced a financial
aid package of Rs 1,100 crore for the state’s Micro, Medium and
Small Enterprises (MSMEs) sector, which has drawn to a virtual
standstill for nearly two months since the beginning of the
nationwide Covid-19 driven lockdown. Named as the ‘Restart
Package’, the government released its first installment of Rs 450
crore on Saturday. It said the aid package is expected to benefit
98,000 units which employ more than 10 lakh people.

The government also waived off the minimum power demand

charges for MSMEs during the months of April, May, and June.
According to officials, the move is expected to benefit over 72,531
micro-enterprises, 24,252 small and 645 medium scale industries.
The government is also planning to provide Rs 200 crore as
investment capital by providing loans at very low interest rates to
MSMEs. Under the plan, to help the MSME sector revive quickly, the
state government will allocate Rs 200 crore as investment capital by
providing loans in partnership with SIDBI at a low-interest rate.

Speaking to the media, Chief Minister Y S Jagan Mohan Reddy

said that despite the deep financial crisis the state is facing, the
government was giving a boost to the MSME’s .He claimed that the
previous government did not pay industrial incentives worth nearly
Rs 828 crore between 2014-2019.The Chief Minister further
announced that the state government has identified around 360
items to be purchased from MSMEs and all those payments will be
cleared in a period of 45 days.

Of the total purchases, almost 25 percent are to be done from micro

and small enterprises, four percent from enterprises run by members
of the SC/ST community, and three percent from enterprises run by
women. The CM also instructed district collectors to lay special focus
on the MSME segment and assign a Joint Collector exclusively for the
sector’s development.

TRANSPORTATION:
The coronavirus has had a profound impact on all spheres of life and
the rapidity of its spread is adversely affecting lives and livelihoods
across the globe.

The transport sector is one of the primary victims of COVID-19 with

the pandemic hitting all alike, from rickshaw-pullers to the airlines.
With social distancing identified as pivotal in keeping the virus at bay,
people have been asked to work from home, resulting in a sharp fall
in the transportation sector. A significant portion of the airline fleet
was grounded, number of cars on the road dwindled and the public
transport system has tumbled to an all-time low.

Citing higher risk of community spread of the virus in public

transport, the Centre imposed complete lockdown restricting
movement. The move brought the large fleet of buses belonging to
the Andhra Pradesh State Road Transport Corporation (APSRTC) to a
screeching halt. They were confined to the depots, adding to the
huge revenue losses accumulated by the corporation over the last
many years. This also compounded the misery of the scores of
migrant workers who lost all means to reach home to escape the
virus attack.

COVID-19 has changed perceptions. Even after the situation

normalizes, the risk associated with crowded areas could lead to a
shift in preferences towards personal travel mode. After COVID, I’ll
avoid public transport to stay away from crowds," says Rajendran
Minnal, a retired professor.

COVID-19 has changed perceptions. Even after the situation

normalizes, the risk associated with crowded areas could lead to a
shift in preferences towards personal travel mode. After COVID, I’ll
avoid public transport to stay away from crowds," says Rajendran
Minnal, a retired professor. Minnal is not alone in thinking so as
there are others who doubt if they would opt for shared mobility
modes like autorickshaws even after the lockdown is completely
lifted. However, it will be premature to say at this point if these
modes will continue to face a slump in demand in the long run.

Although the APSRTC resumed services partially from May 21

(Thursday), the confusion among the officials is palpable – will they
pick up where they left off (before COVID-19) or is this the beginning
of a new chapter?

This may not be the first time that public transport has been limited
but the scale of the restriction is unprecedented. The pandemic is
demonstrating how an immobile world looks like with a focus on the
central role of transport in the economy.

Running RTC buses with reduced number of seats to adhere to the

social distancing norm will only mean less revenue on the operations
but the government is driven by the ‘public welfare’ motto. "Despite
heavy losses, we have not increased the bus fares and have been
desperately looking for alternative means to shore up our revenues
only because we do not want people at the grassroot level to suffer
in the absence of public transport facility," says Transport Minister
Perni Venkataramaiah.

CONCLUSION:
In the ongoing period of COVID 19 there is a very bad impact on the
economy. To keep the economy rolling, financial guidelines need to
be rewritten. One thing the center can do is to offer a moratorium on
outstanding loans for the MSME and critical sectors. There were no
large number of screenings initially. But through the village volunteer
system the state govt. could monitor the people and tackle the
problems easily. Hence, There is a necessity to remodel the country’s
approach to growth.
REFERENCES:
 Andhra Pradesh Socio Economic Survey 2018-19

 https://en.wikipedia.org/wiki/Tertiary_sector_of_the_economy
#Examples_of_tertiary_sector_industries

 https://www.newindianexpress.com/states/andhra-
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 https://content.magicbricks.com/property-news/hyderabad-
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pradesh-under-stress-prepares-for-hurdles-ahead/112741.html

 https://www.newindianexpress.com/states/andhra-
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 https://taxconcept.net/archives/12374

 https://www.livemint.com/news/india/financial-guidelines-
need-to-be-rewritten-due-to-covid-19-andhra-minister-
11586092216054.html

 https://www.thehindu.com/news/national/andhra-
pradesh/coronavirus-andhras-dire-finances-drive-it-to-seek-
central-help/article31545962.ece