A

MANAGEMENT RESEARCH REPORT- II

ON

“COVID-19 OUTBREAK IMPACT ON THE INDIAN ECONOMY”

Submitted to:
Department Of Business Management
Sankalchand Patel College of Engineering, Visnagar
In partial fulfillment of the requirement of the award for the degree of

MASTER OF BUSINESS ADMINSTRATION

At
SANKALCHAND PATEL UNIVERSITY

Under the guidance of:

Dr. Chirag Patel
Associate Professor

Submitted by:
Name Enrolment No.
Shital R. Chaudhari 2018095900012737

Batch: 2018-2020 MBA semester IV

Faculty of Management Studies
 STUDENT DECLARATION

I, the undersigned, hereby declare that this management research project titled
“COVID-19
OUTBREAK IMPACT ON THE INDIAN ECONOMY” is a result of my own work and
our indebtedness to other work publication, references, if any, have been duly
acknowledged.
If I found guilty of coping any other report or published information and showing
as my original
work, I understand that I willl be liable and punishable by SPU, which may include
‘Fail’ in
examination, ‘repeat study & re-submission of the report’ or any other punishment
that SPU
may decide.

Enrolment No. Name

Signature

2018095900012737 Shital R. Chaudhari

Place: Visnagar
Date:

II
 INSTITUTE CERTIFICATE

This is to certify that the management research project titled as “COVID-19

OUTBREAK
IMPACT ON THE INDIAN ECONOMY” is the Bonafied work of students, who carried out
their research under my supervision. I also certify further, that to the best of my
knowledge the
work reported herein does not form part of any other projected report or
dissertation on the
basis of which a degree or award was conferred on an earlier occasion on this or
any other
candidate.

(Name & Sign of the Guide) (Name & Sign of Institute

Head)

III
 ACKNOWLEDGMENT

I am indebted to Dr. Jitendra Shrma, HOD, MBA Department, SPCE for providing an
opportunity of preparing this project report and allowing us to use the resources
of the
institution during this project.

I am extremely thankful to our project guide Dr. Chirag Patel for his guidance
regarding the
preparation of the project report. His guidance has proved to be very useful and
without which
the preparation of this report might not had been possible.

I am also thankful to the other faculty members of MBA Department, SPCE for
extending their
valuable support for this project.

Finally, I would also like to thank our family members, who are always a source for
inspiration
for us, for showing their understanding, patience and for all their possible help
for the
preparation of this project.

Finally, I thank all those who directly and indirectly contributed to this project
report.
Thank you!

IV
 EXECUTIVE SUMMARY

I have prepared a project report on “COVID-19 OUTBREAK IMPACT ON THE INDIAN

ECONOMY” First of all, the project starts from the Introductory Part. The
introduction of
COVID-19 disease has been described very briefly in the beginning of the project.
The
Introduction of COVID-19, Growth Data of corona virus and also what is the impact
on global
economy. Then I write the Origin and meaning of corona virus disease as pandemic.
Then
Literature Review of COVID-19.

After completion of Introduction part, the Research Methodology has been drawn, in
which I
have included Research Design, Sampling Method, data collection methods, Sample
Frame and
Tools for Data Collection.

Then I have included Analysis of Data and statistical part in which i have included
charts,
tables and interpretations.

Then I have also include government reliefs which announced by Indian government to
bust
and survive economy, and also include reliefs given by out of country.

At the last my Findings and suggestions about the whole survey of impact of
outbreak of
COVID-19 on Indian economy.

I also give the reference of those websites which provides me relevant material.
 TABLE OF CONTENTS
CHAPTER PARTICULAR PAGE NO.
Student’s Declaration II
Institute Certificate III
Acknowledgement IV
Executive Summary V
1 INTRODUCTION 8
1.1 Introduction of Corona Virus 9
1.2 What is COVID-19? 10
1.3 Outbreaks of Coronavirus – related diseases 10

1.4 What is a pandemic? 11

1.5 Origin of COVID-19 11
1.6 Is it more dangerous than other viruses? 13
1.7 Is there a vaccine for Corona Virus? 14
1.8 Coronavirus Cases in World (30 April 2020) 15
1.9 How to Control COVID-19 16
1.10 The Coronavirus Impact on the Global 17
Economy
1.11 Percent change in Real GDP Growth 18
1.12 Global Industries effected by COVID-19 21
2 LITERATURE REVIEW 23
2.1 Literature Review of COVID-19 24
3 RESEARCH METHODOLOGY 26
3.1 Objectives of the Research 26
3.2 Research Methodology 26
3.3 Sources of data 26
4 DATA ANALYSIS AND KEY 29
STATISTICS OF COVID-19
4.1 Estimated quarterly impact from the COVID- 30
19 on India's GDP growth in 2020
4.2 Indian GDP Forecasting by Rating Agencies 30
VI
 and Banks
4.3 Potential Impact on Key Sectors 33
4.4 COVID-19 Impact on Spending 35
4.5 Cost of lockdown 36
4.6 Three Economic Scenario Model India 38
GDP Estimates
4.7 COVID – 19 Impact on Stock Exchange 41
4.8 BSE Return during Crisis 40
4.9 Equity Investors lost in 2020 42
4.10 Economic Slowdown is the big worry now 43
4.11 Crash Attracting Investor 43
4.12 Lockdown Effect on Indian Trade 44
4.13 Lockdown Effect on Indian Import-Export 45
4.14 COVID-19 Effect on Currencies Exchange 47
4.15 India’s Oil Demand 49
4.16 Low oil prices are an opportunity for India to 50
Stockpile
5 GOVERNMNT AND OTHER RELIEFS 52
6 SUGGESTIONS AND FINDINGS 57
7 BIBLIOGRAPHY 63

VI
I
 Chapter-1
Introduction

SPCE,VISNAGAR 8
[1.1] Introduction of Corona Virus?

The coronavirus is a family of viruses that can cause a range of illnesses in

humans including
common cold and more severe forms like SARS and MERS which are life-threatening.
The
virus is named after its shape which takes the form of a crown with protrusions
around it and
hence is known as coronavirus.

According to the Doctor a type of common virus that infects humans, typically
leading to an upper
respiratory infection (URI.) Seven different types of human coronavirus have been
identified. Most
people will be infected with at least one type of coronavirus in their lifetime.
The viruses are spread
through the air by coughing and sneezing, close personal contact, touching an
object or surface
contaminated with the virus and rarely, by fecal contamination. The illness caused
by most
coronaviruses usually lasts a short time and is characterized by runny nose, sore
throat, feeling
unwell, cough, and fever.

The body's respiratory system includes the nose, sinuses, mouth, throat (pharynx),
voice box
(larynx), windpipe (trachea), and lungs. Upper respiratory infections affect the
parts of the
respiratory tract that are higher on the body, including the nose, sinuses, and
throat, while lower
respiratory infections affect the airways and lungs.

SPCE,VISNAGAR
9
 [1.2] What is COVID-19

In the early days of the outbreak, the media, medical experts and health
professionals were
referring to "the coronavirus" as a catch-all term to discuss the outbreak of
illness. But a
coronavirus is a type of virus as we explain in the section above, rather than
a disease itself.

To alleviate the confusion and streamline reporting, WHO has named the new
disease COVID-
19 (for coronavirus disease 2019). "Having a name matters to prevent the use of
other names
that can be inaccurate or stigmatizing," said Tedros Adhanom Ghebreyesus,
director-general
of the WHO. "It also gives us a standard format to use for any future
coronavirus outbreaks."

The Coronavirus Study Group, part of the International Committee on Taxonomy of

Viruses,
was responsible for naming the novel coronavirus itself. The novel coronavirus
-- the one that
causes the disease -- is known as SARS-CoV-2. The group "formally recognizes
this virus as
a sister to severe acute respiratory syndrome coronaviruses (SARS-CoVs)," the
species
responsible for the SARS outbreak in 2002-2003. Therefore:

 The novel coronavirus is officially named SARS-CoV-2.

 The disease caused by SARS-CoV-2 is officially named COVID-19.

[1.3] Outbreaks of Coronavirus – related diseases

Outbreaks of coronavirus types of relatively high mortality are as follows:-

Outbreak Virus Type

Death

2002-04 Severe acute respiratory syndrome SARS-CoV

774
Outbreak
2012 Middle East respiratory syndrome MERS-CoV
Over 400
coronavirus outbreak
2015 Middle East respiratory syndrome outbreak MERS-CoV
36
in South Korea

SPCE,VISNAGAR
10
 2018 Middle East respiratory syndrome outbreak MERS-CoV 41
2019-20 Coronavirus pandemic SARS-CoV-2 Up to
28,823
(till
march2019 -
2020)

[1.4] What is a Pandemic?

On March 11, the WHO officially classified the COVID-19 outbreak a pandemic.

A pandemic, in simplest terms, is the "worldwide spread of a new disease," Ellen

Foxman,
MD, Ph.D., a Yale Medicine clinical pathologist and researcher of viral infections
and
microorganisms in the Clinical Virology Laboratory, tells CNET.

The WHO and CDC have their own definitions of pandemic, though they are
fundamentally
the same.

According to the WHO, a pandemic is "an epidemic occurring worldwide, or over a

very wide
area, crossing international boundaries and usually affecting a large number of
people." The
CDC defines a pandemic as "an epidemic that has spread over several countries or
continents,
usually affecting a large number of people."

[1.5] Origin of COVID-19

Many health experts believe that the new strain of coronavirus likely originated in
bats or
pangolins. The first transmission to humans was in Wuhan, China. Since then, the
virus has
mostly spread through person-to-person contact.

SPCE,VISNAGAR
11
The virus appears to have originated in Wuhan, a Chinese city about 650 miles south
of
Beijing that has a population of more than 11 million people. The Huanan Seafood
Wholesale
Market, which sells fish, as well as a panoply of meat from other animals,
including bats, snakes
and pangolins, was implicated in the spread in early January.

Prestigious medical journal The Lancet published an extensive summary of the

clinical features
of patients infected with the disease stretching back to Dec. 1, 2019. The very
first patient
identified had not been exposed to the market, suggesting the virus may have
originated
elsewhere and been transported to the market, where it was able to thrive or jump
from human
to animal and back again. Chinese authorities shut down the market on Jan. 1 2020.

On Feb. 22, a report by the Global Times, a Chinese state media publication,
suggested the
Huanan seafood market was not the birthplace of the disease citing a Chinese study
published
on an open-access server in China.

Markets have been implicated in the origin and spread of viral diseases in past
epidemics,
including SARS and MERS. A large majority of the people so far confirmed to have
come
down with the new coronavirus had been to the Huanan Seafood marketplace in recent
weeks.
The market appears to be an integral piece of the puzzle, but research into the
likely origin and
connecting a "patient zero" to the initial spread is ongoing.

An early report, published in the Journal of Medical Virology on Jan. 22, suggested
snakes
were the most probable wildlife animal reservoir for SARS-CoV-2, but the work was
soundly
refuted by two further studies just a day later, on Jan. 23. "We haven't seen
evidence ample
enough to suggest a snake reservoir for Wuhan coronavirus," said Peter Daszak,
president of
nonprofit EcoHealth Alliance, which researches the links between human and animal
health.

"This work is really interesting, but when we compare the genetic sequence of this
new virus
with all other known coronaviruses, all of its closest relatives have origins in
mammals,
specifically bats. Therefore, without further details on testing of animals in the
markets, it looks
like we are no closer to knowing this virus' natural reservoir."

Another group of Chinese scientists uploaded a paper to preprint website biorXiv,

having
studied the viral genetic code and compared it to the previous SARS coronavirus and
other bat
 SPCE,VISNAGAR
12
coronaviruses. They discovered the genetic similarities run deep: The virus shares
80% of its
genes with the previous SARS virus and 96% of its genes with bat coronaviruses.
Importantly,
the study also demonstrated the virus can get into and hijack cells the same way
SARS did.

The ant-eating pangolin, a small, scaly mammal, has also been implicated in the
spread of
SARS-CoV-2. According to the New York Times, it may be one of the most trafficked
animals
in the world and it was sold at the Huanan Seafood Market. The virus likely
originated in bats
but may have been able to hide out in the pangolin, before spreading from that
animal to
humans. Researchers caution the full data have not yet been published but
coronaviruses similar
to SARS-CoV-2 have been found in pangolins before.

All good science builds off previous discoveries -- and there is still more to
learn about the
basic biology of SARS-CoV-2 before we have a good grasp of exactly which animal
vector is
responsible for transmission -- but early indications are the virus is similar to
those seen in bats
and likely originated from them.

[1.6] Is it more dangerous than other viruses?

Most cases of COVID-19 are not serious. However, it can cause symptoms that become
severe,
leading to death in some cases.

The outbreak of COVID-19 has been sudden. This makes it difficult to estimate how
often the
disease becomes severe or the exact rate of mortality.

One report suggests that out of 1,099 people with confirmed cases in China,
around 16% became severe. Another report estimates that about 3.6% of the confirmed
cases
in China led to death.

These figures are likely to change as the situation evolves. However, they suggest
that COVID-
19 is more deadly than influenza. For example, seasonal influenza typically leads
to death in
less than 0.1% of cases.

When testing becomes easier and more widespread, health experts will have a more
accurate
insight into the exact number of severe cases and deaths.

SPCE,VISNAGAR
13
SARS is another type of coronavirus. It became a global pandemic in 2002–2003.
Around 9.6% of SARS cases led to death. However, COVID-19 is more contagious, and
it is
already the cause of more deaths worldwide.

[1.7] Is there a vaccine for Corona Virus?

Developing new vaccines takes time and they must be rigorously tested and confirmed
safe via
clinical trials before they can be routinely used in humans. Anthony Fauci,
director of the
National Institute of Allergy and Infectious Diseases in the US, has commonly
stated a vaccine
is at least a year to 18 months away. Experts agree there's a ways to go yet.

However, there is great progress being made in this regard and a number of vaccine
candidates
have appeared in the time since COVID-19 was discovered. We've collated everything
we
know about potential vaccines and current treatment options that are being used
around the
world.

Many viruses are preventable through antiviral vaccinations. However, it takes time
to develop
and distribute safe and effective vaccines. A vaccine for COVID-19 is unlikely to
be available
any time soon.

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14
[1.8] Coronavirus Cases in World (30 April 2020)

Total Cases of Corona Virus

(Still 30 Apr 2020)

Name of Counties Number of Cases Death

World 3,230,433 228,394

USA 1,064,572 61,670
Spain 236,899 24,682
Italy 203,591 27,682
France 166,591 24,087
UK 165,221 26,097
Germany 161,539 6,467
Turkey 117,589 3,081
Russia 106,498 1,073
Iran 93’657 5,957
China 82,862 4,633

SPCE,VISNAGAR 15
 Brazil 79,685 5,513
Canada 51,597 2,996
Belgium 47,859 7,501
Netherlands 38,802 4,711
Peru 33,931 943
India 33,062 1080
Switzerland 29,407 1,716
Ecuador 24,675 883
Portugal 24,505 973
Saudi Arabia 21,402 157
Sweden 20,302 2,462
Ireland 20,253 1,190
Mexico 17,799 1,732
Singapore 16,170 14

Around 3,300 people died in the Chinese outbreak - but both USA and Spain now have
far
higher death tolls. Together they account for just over half of all deaths
worldwide.

The outbreak was declared a global pandemic by the World Health Organization (WHO)
on 11
March. This is when an infectious disease is passing easily from person to person
in many parts
of the world at the same time.

The WHO said it took more than three months to reach the first 100,000 confirmed
cases
worldwide, but only 12 days to reach 200,000, four days to reach 300,000 and three
days to
reach 400,000 and another five to reach up to 700,000.

[1.9] How to Control COVID-19

We learnt that epidemics can be controlled without drugs or vaccines. The best way
to prevent
the virus from spreading is by avoiding close contact with people with COVID-19 and
washing
the hands regularly and stay at home.

SPCE,VISNAGAR
16
When soap is not available, use a hand sanitizer with at least 60% alcohol. Avoid
touching the
face before washing the hands.

People with COVID-19 should stay at home and avoid contact with other people to
prevent the
illness from spreading. Keep surrounding surfaces as clean as possible and avoid
sharing
household items.

Governments, public bodies, and other organizations are also taking measures to
prevent the
spread of SARS-CoV-2. Look out for announcements of any new measures to stay up to
date.

[1.10] The Coronavirus Impact on the Global Economy

SPCE,VISNAGAR
17
The ongoing spread of the new coronavirus has become one of the biggest threats to
the global
economy and financial markets.

The virus, first detected in the Chinese city of Wuhan last December, has infected
more than
6,00,000 people in at least 195 countries and territories globally, according to
the World
Health Organization. Of those infected, more than 30,000 people have died yet
ending to
march, according to WHO data.

[1.11] Percent change in Real GDP Growth

(IMF April 2020
Projections)

2019 2020 2021

World 2.9 -3.0 5.8

Adv. Economies 1.7 -6.1 4.5
Euro Area 1.2 -7.5 4.7
Germany 0.6 -7.0 5.2
France 1.3 -7.2 4.5
Italy 0.3 -9.1 4.8
Spain 2.0 -8.0 4.3
Japan 0.7 -5.2 3.0
United kingdom 1.4 -6.2 4.2
Canada 1.6 -6.2 4.2
China 6.1 1.2 9.2
India 4.2 1.9 7.4
Russia 1.3 -5.5 3.5
Latin America 0.1 -5.5 3.5
Brazil 1.1 -5.3 2.9
Mexico -0.1 -6.6 3.0
Middle East 1.2 -2.8 4.0
Saudi Arabia 0.3 -2.3 2.9
Sub Saharan Africa 3.1 -1.6 4.1
Nigeria 2.2 -3.4 2.4

SPCE,VISNAGAR
18
 South Africa 0.2 -5.8
4.0

(Source: World Economic Outlook, International

Monetary Fund, April 14, 2020)

The rate of economic growth in the Euro area is projected to decline by 7.5%. Most
developing
and emerging economies are projected to experience a decline in the rate of
economic growth
of 2.0%, reflecting tightening global financial conditions and falling global trade
and
commodity prices. In contrast, China, India, and Indonesia are projected to
experience small,
but positive rates of economic growth in 2020. The IMF also argues that recovery of
the global
economy could be weaker than projected as a result of: lingering uncertainty about
possible
contagion, lack of confidence, and permanent closure of businesses and shifts in
the behavior
of firms and households.

World Real GDP Growth

7
6
5 5.8
4
3
2 2.9
1
0
-1
-2 -3
-3
-4
2019 2020 2021

As a result of the various challenges, the IMF qualified its forecast by arguing
that:

A partial recovery is projected for 2021, with above trend growth rates, but the
level of GDP
will remain below the pre-virus trend, with considerable uncertainty about the
strength of the
rebound. Much worse growth outcomes are possible and maybe even likely.

SPCE,VISNAGAR
19
This would follow if the pandemic and containment measures last longer, emerging
and
developing economies are even more severely hit, tight financial conditions
persist, or if
widespread scarring effects emerge due to firm closures and extended unemployment.

Before the COVID-19 outbreak, the global economy was struggling to regain a broad-
based
recovery as a result of the lingering impact of growing trade protectionism, trade
disputes
among major trading partners, falling commodity and energy prices, and economic
uncertainties in Europe over the impact of the UK withdrawal from the European
Union.
Individually, each of these issues presented a solvable challenge for the global
economy.
Collectively, however, the issues weakened the global economy and reduced the
available
policy flexibility of many national leaders, especially among the leading developed
economies.
In this environment, COVID-19 could have an outsized impact. While the level of
economic
effects will eventually become clearer, the response to the pandemic could have a
significant
and enduring impact on the way businesses organize their work forces, global supply
chains,
and how governments respond to a global health crisis.

 Slowdown in manufacturing activity

The manufacturing sector in China has been hit hard by the virus outbreak.

SPCE,VISNAGAR
20
The Caixin/Markit Manufacturing Purchasing Managers’ Index a survey of private
companies
— showed that China’s factory activity contracted in February, coming in at a
record-low
reading of 40.3. A reading below 50 indicates contraction.

Such a slowdown in Chinese manufacturing has hurt countries with close economic
links to
China, many of which are Asia Pacific economies such as Vietnam, Singapore and
South
Korea.

Factories in China are taking longer than expected to resume operations, several
analysts said.
That, along with a rapid spread of COVID-19 outside China, means that global
manufacturing
activity could remain subdued for longer, economists said.

[1.12] Global Industries effected by COVID-19

Several industries have been adversely impacted due to the spread of COVID-19
globally.
News reports are painting a dismal picture of the number of supply chains that are
affected.

The analysis by the UN Department of Economic and Social Affairs (DESA) said the
COVID-
19 pandemic is disrupting global supply chains and international trade. With nearly
100
countries closing national borders during the past month, the movement of people
and tourism
flows have come to a screeching halt.

SPCE,VISNAGAR
21
"Millions of workers in these countries are facing the bleak prospect of losing
their jobs.
Governments are considering and rolling out large stimulus packages to avert a
sharp downturn
of their economies which could potentially plunge the global economy into a deep
recession.
In the worst-case scenario, the world economy could contract by 0.9 per cent in
2020," the
DESA said, adding that the world economy had contracted by 1.7 per cent during the
global
financial crisis in 2009.

"In the worst-case scenario, the global output would contract by 0.9 per cent -
instead of
growing by 2.5 per cent - in 2020," it said, adding that the scenario is based on
demand-side
shocks of different magnitudes to China, Japan, South Korea, the US and the EU, as
well as an
oil price decline of 50 per cent against our baseline of USD 61 per barrel.

SPCE,VISNAGAR
22
 Chapter-2
Literature review of
COVID-19

SPCE,VISNAGAR 23
[2.1] LITERATURE REVIEW OF COVID-19

The review of literature paves way for clear understanding of the area of research
already
undertaken and throws a light potential area which are yet to be covered. In this
regard an
attempt has been made to make a brief survey of the work under-taken on the field
of Economic
Impact on Indian Economy. To review some of the important studies are presented
below such
as.

 Arun M kumar chairmen and CEO of kpmg in India (1 Apr 2020) As our new
financial
year commences, the novel coronavirus has infected more than thirty millions
people in
195 countries. A scourge confronting all of being that of us have largely
taken for granted.

 Multazim M Pathan Medical Research Scientist, (25 Feb 2020), The study is
cumulative
of the recent literature released by the Central Government of India DHR and
ICMR, the
Chinese scientists handling the samples and Interim measures on controlling
the 2019n-
Corona virus by World Health Organization and American National Institute of
Health.

 Li et al (25 march 2020), How do predict development of outbreak early? To

predict the
development of this outbreak as early and as reliably as possible. Peak
interest for these
keywords in Internet search engines and social media data was 10–14 days
earlier than the
incidence peak of COVID-19 published by the NHC.

 Anzai et al., Japan, Assessing the Impact of Reduced Travel on Exportation

Dynamics
of Novel Coronavirus Infection COVID-19 (24 FEB 2020) Comparative genetic
analysis
of the novel coronavirus (2019-nCoV/SARS-CoV-2) receptor ACE2 in different
populations. Depending on the scenario, the estimated delay may be less than
one day. As
the delay is small, the decision to control travel volume through
restrictions on freedom of
movement should be balanced between the resulting estimated epidemiological
impact and
predicted economic fallout.

SPCE,VISNAGAR
24
 Quilty et al., UK, (6 FEB 2020), Effectiveness of airport screening at
detecting travellers
infected with novel coronavirus (2019-nCoV). Airport screening is unlikely to
detect a
sufficient proportion of 2019-nCoV infected travellers to avoid entry of
infected travellers.

 Sunil Kumar (4 Apr 2020), Agricultural Extension, Agronomy and Economic impact
on
Indian economy and sectorial impact of out break.

 Anbesh Jamwal, Sumedha Bhatnagar, Prakarti Sharma (12 April 2020),There is a

great
slowdown in the global economy due to COVID-19 attack which is likely to costs
around
$1 trillion. The spread of COVID-19 infection can be reduced by minimizing the
H-H
transmissions.

 Ministry of Health and Family Welfare Government of India, Novel Coronavirus

Disease 2019, Containment Plan for Large Outbreaks.

SPCE,VISNAGAR
25
 CHAPTER- 3
RESEARCH METHODOLOGY

SPCE,VISNAGAR 26
[3.1] Objectives of the Research

 To analyze the Indian economic impact of the outbreak.

 To study future Opportunities of Indian Service and Manufacturing Sectors for
global
pandemic disease.
 To study the stock market crisis.
 To work out the growing challenges faced by Indian economy.
 To study the declining growth of different Indian industries and consumer
demand.
 To study about how much overall impact on economy and government relief to save
economy.
 To study on future growth of Indian GDP with COVID-19 outbreak.

[3.2] Research Methodology

 Data Collection Method

Secondary data comes from a source other than the researcher. (Primary data, by
contrast,
is that which the researcher collects for his or her own study.) Examples
include different
Websites government census reports, other governmental databases, and
administrative
data.

[3.3] Sources of Data

For the present study, the secondary data has been collected by me from following

sources:-
 Research paper and Report of Rating Agencies

- FICCI Report

- KPMG Report

- The Indian Council of Medical Research (ICMR)

- Moody’s Report

- CRISIL Research Paper

- ICRA Report

SPCE,VISNAGAR
27
 - UN Reports

- World Bank Reports etc…..

 Newspapers

- Articles of time of India

- Economics Times

- Business Standards

- Business Todays etc….

 Government Reports and Circulars

 Research Journals and Publications etc…

 Internet, Websites

 Published articles, online available interviews

SPCE,VISNAGAR 28
 Chapter-4
Data Analysis And
Key Statistics of
COVID-19

SPCE,VISNAGAR 29
[4.1] Estimated Quarterly Impact From the COVID-19 on India's GDP growth

(IN 2020)

GDP Growth India

-9.3 APR-JUN 2020

JAN-MAR 2020 5

OCT-NOV 2019 1.2

-12 -10 -8 -6 -4 -2 0 2 4
6

India's quarterly GDP was estimated to a decline of over nine percent between April
and June
2020. This was a decrease from a five percent growth in the beginning of 2020. The
country
went into lockdown on March 25, 2020, the largest in the world, restricting 1.3
billion people.
This was extended until May 3, 2020. India's government estimated its financial,
real estate
and professional services sector to be hardest hit during the period of the
lockdown.

[4.2] Indian GDP Forecasting by Rating Agencies and Banks

India had stepped into 2020 with lower growth projections on the economic front
after several
quarters of snail-paced GDP growth. And now, the coronavirus pandemic has further
turned
matters gloomy.

International rating agency Fitch has slashed India’s GDP growth rate projections
for 2020-21
to 0.8 per cent. Brian Coulton, chief economist at Fitch Ratings, said, “The world
GDP is now
expected to fall by 3.9 per cent in 2020, a recession of unprecedented depth in the
post-war
period.”

SPCE,VISNAGAR
30
India Today Data Intelligence Unit (DIU) compared projections of select financial
institutions
Reserve Bank of India (RBI), World Bank and IMF, and rating agencies Moody’s and
Fitch
and found that on average, they project a 2-3 per cent GDP growth rate for 2020-21.

Indian GDP Forecasting by Rating Agencies and Banks

INDIAN GDP FORECAST

14

12

10

6
8

5
6
5.4
5.8
4

5.6
5.5
2 4
1.9 2.5
0
0.8
IMF WORLD BANK RBI MOODY'S
FITCH

PRE COVID-19 FORECAST

POST COVID-19 FORECAST

 RBI

Ever since the coronavirus lockdown was announced, RBI has been on its toes to
keep the economy intact. The banking regulator has cut down repo rate to a 15-
year-
low of 4.4 per cent, allowed banks to stall EMIs for term loans for up to three
months
and increased liquidity by cutting down Cash Reserve Ratio (CRR) all in order
to mitigate the effects of the lockdown.

In its February round of Monetary Policy Committee, the RBI had projected a 6
per
cent GDP growth for 2020-21. The central bank had then said that coronavirus
(which was

SPCE,VISNAGAR
31
 in its initial stage at that time) would impact global trade and tourism, but
rabi crop was
supposed to improve private consumption, especially in rural areas.

But then, coronavirus swept through India. As of April 23 afternoon, India

reported close
to 22,000 cases with nearly 700 deaths. On April 9, RBI released its half-yearly
Monetary
Policy Report in which it projected that India’s real GDP would grow at 5.5 per
cent () in
2020-21. The report also said that a three-month lockdown may hit the economy
hard.

If the shutdown continues for three months with no offsetting factors, annual GDP
growth
could be between 4-6 percentage points lower than it otherwise might have been”,
the RBI’s
monetary policy report stated.

 IMF and World Bank

The IMF and World Bank had earlier projected 5.8 per cent and 5 per cent GDP
growth
rate for the Indian economy for FY 2020-21. At that time too, the IMF had
reasoned a more
than expected slower demand that led it to reduce expectations from India.

But this time, due to the coronavirus lockdown, the IMF thinks it might grow at
1.9 per
cent. RBI governor Shaktikanta Das called it a good sign as it still is one of
the
highest among G20 countries.

The World Bank had also cut short its expectations from India owing to lingering
credit
weakness while projecting a 5 per cent growth rate for 2020-21.

On April 12, the World Bank gave a range of GDP growth rates depending on India’s
containing of the virus a 4 per cent growth if policy measures pay off and a 1.5
per cent
growth if shutdown is extended.

 Moody’s and Fitch

In January, Fitch Ratings said India would recover in 2020-21 at a GDP growth
rate of 5.6
per cent which it cut down to a 30-year-low of 2 per cent in the first week of
April.

On Thursday, Fitch Ratings revised its expectations and projected a 0.8 per cent
GDP
growth rate for 2020-21.

Likewise, Moody’s ratings are also less hopeful. In January, they projected a 5.8
percent
growth rate for FY21, and by the end of March, they cut it down to 2.5 per cent.
SPCE,VISNAGAR
32
[4.3] Potential Impact on Key Sectors

Output Change GDP Bank Credit Employment

Q1 FY 2021vs Share, % FY 2019 (%) FY 2018,
Name of Sectors
Q4 FY 2020 (Million)
Airlines and Hotels -70 to 75 2 1
8
Auto and advanced -50 to -60 2 1
industries
Construction and real -50 8 11
54
estate
Textiles -50 23
Freight and logistics -40 to -45 8 2
22
Metals and mining -35 to -40 7 7
Oil and gas -20 to -25 7 2
Power -20 to -25 2 9
3
Consumer and retail -20 to -25 11 11
47
Chemicals -15 to -20 2 1
Agriculture -15 15 18
205
IT services -10 to -15 5 0
4
Pharmaceuticals -10 to -15 1 1
Telecommunications 0 to -5 2 2
1
Total 67 69
402

Manufacturing 56 %

Assuming scenario 2 plays out, the potential economic loss in India would vary by
sector, with
current-quarter output drops that are large in sectors such as aviation and lower
in sectors such
as IT-enabled services and pharmaceuticals. Current-quarter consumption could drop
by more
than 30 percent in discretionary categories, such as clothing and furnishings, and
by up to 10
percent in areas such as food and utilities. Strained debt- service-coverage ratios
would be
anticipated in the travel, transport, and logistics; textiles; power; and hotel and
entertainment
sectors.

SPCE,VISNAGAR
33
Scenario 2 (Lockdown Continues Until mid-May 2020): Potential Impact on
Key Sectors

Potensial Impact on key Sectors

Q1 FY 2021 vs Q4 FY 2020
20 15
11
8 8 7 7
10 5
2 2 2 2 2
1 2
0

-10
-5
-20 -15 -15
-15
-20
-30 -25 -25 -25
-40
-40
-50 -45
-50 -50
-60
-60
-70

-80 -75
Output change GDP Share

There could be solvency risk within the Indian financial system, as almost 25
percent of
MSME and small- and medium-size-enterprise (SME) loans could slip into default,
compared
with 6 percent in the corporate sector (although the rate could be much higher in
aviation,
textiles, power, and construction) and 3 percent in the retail segment (mainly in
personal loans
for self-employed workers and small businesses). Liquidity risk would also need
urgent
attention as payments begin freezing in the corporate and SME supply chains.
Attention will
need to be given to the liquidity needs of banks and nonbanks with stretched
liquidity-coverage
ratios to ensure depositor confidence.

Given the magnitude of potential unemployment, business failure, and financial-

system risk, a
comprehensive package of fiscal and monetary interventions may need to be planned,
keeping
 SPCE,VISNAGAR
34
scenario 2 in mind. This might be triggered progressively as situations evolve and
as actions
are taken to move to the more favorable scenario 1 through effective public-health
measures
and graded lockdowns.

[4.4] COVID-19 Impact on Spending

COVID-19 IMPACT ON SPENDING

40%

34% 32%
20%
19%

0%

-20% -24%

-40%
-48%
-51%

-60%
-69% -71%

-80%

The COVID-19 crisis is expected to severely impact the overall consumption trend
and
consumer spending in India. Following the COVID-19 outbreak and subsequent lockdown
in
the second fortnight of March, all segments have faced the brunt, albeit with
varying
magnitudes.

Discretionary spending has also been hit hard with sales coming to a grinding halt
for a few
companies, though some companies in the food and beverages(F&B) and home and
personal
hygiene categories have benefited from panic buying and stock piling by consumers.
Experts
point out that all the consumer segments have been hit hard due to Covid-19

SPCE,VISNAGAR
35
In its monetary policy report, the Reserve Bank of India has expressed serious
concerns about
consumption and consumer spending in India due to the COVID-19 pandemic. The RBI's
monetary policy report says that COVID-19 would directly impact economic activity
to the
lockdown, and also through second-round effects operating through global trade and
growth.
The impact of COVID-19 on inflation is ambiguous, with a possible decline in food
prices
likely to be offset by potential cost-push increases in prices of non-food items
due to supply
disruptions.

RBI's report observes that private consumption in particular is at serious risk

from the
pandemic, notwithstanding improved rabi prospects, the recent rise in food prices,
and the
rationalisation of personal income tax rates in the Union Budget 2020-21 along with
measures
to boost rural and infrastructure spending. It says that the aggregate demand is
expected to be
impacted adversely by a likely recession in the global economy, caused by
disruptions in global
supply chains, travel and tourism, and lockdowns in many economies. RBI says that
in the
near-term, the challenge will be to mitigate the adverse impact of Covid-19.

[4.5] Cost of lockdown

GVA (Rs. In
Sector lakh cr.) %
to total
o Agriculture, forest and fishing 27.76
16
o Industry 37.08
22
o Mining and quarrying 4.10
3
o Manufacturing 28.18
16
o Electricity, gas, water supply and other 4.80
3
utilities
o Services 107.15
62
o Construction 13.76
8
o Trade, hotel, transport, communication 31.51
18
and services relating to broadcasting

o
o Financial, real estate and professional 31.51
21
services
 SPCE,VISNAGAR
36
 o Public administration, defence and other 25.22
15
services
Total
171.99 100

Most Effected Industries

Effected Industries
ELECTRICITY, GAS, WATER SUPPLY 3
MINING AND QUARRYING 3
PUBLIC ADMINISTRATION 15
CONSTRUCTION 8
FINANCIAL, REAL ESTATE 21
TRADE, HOTEL, TRANSPORT 18
MANUFACTURING 16
SERVICES
62
INDUSTRY 22
AGRICULTURE, FOREST AND FISHING 16

0 10 20 30 40
50 60 70

Finance and real estate and professional services was estimated to be hardest hit
by the
coronavirus (COVID-19) epidemic in India between April and June 2020 compared to
the same
period in 2019. The overall impact of COVID-19 on the country's economy during this
period
was estimated GVA loss of over nine percent. These estimates came after the
government's aid
package announcement of 1.7
trillion rupees.

The country went into lockdown on March 25, 2020, the largest in the world,
restricting 1.3
billion people, extended until May 3, 2020. For further information about the
coronavirus
(COVID-19) pandemic

The Indian economy is expected to lose over ₹32,000 crore (US$4.5 billion) every
day during
the first 21-days of complete lockdown which was declared following the coronavirus
outbreak.[7][8] Under complete lockdown less than a quarter of India's $2.8
trillion economy
is functional.[9] Up to 53% of businesses in the country will be significantly

SPCE,VISNAGAR
37
affected.[10] Supply chains have been put under stress with the lockdown
restrictions in place;
initially there was a lack of clarity in streamlining what is an "essential" and
what
isn't.[11] Those in the informal sectors and daily wage groups are the most at
risk.[12] A large
number of farmers around the country who grow perishables are also facing
uncertainty.[11] Various businesses such as hotels and airlines are cutting
salaries and laying
off employees.

[4.6] Three Economic Scenario Model India GDP Estimate

Real India GDP, index (pre-COVID-19 projection for Q4 FY 2020 = 100)

140

120
115
110
100 100
95

80

60

40

20

0
04 FY 2020 01 FY 2021 02 FY 2021 03 FY 2021 04 FY 2021

Scenario 1

Scenario 2

Scenario 3

 There Are Three Scenario to estimate Indian GDP

 Nationwide lockdown lifted on Apr 15,2020(end of 21-

day
deadline); prior relaxation for select areas (eg,
logistics)
 Back to work in “save lives and livelihoods” mode,
with strong
 Scenario 1 protection protocols
 Support to households, corporations, and banking
system with
fiscal and monetary stimuli (some measures already
announced)
 SPCE,VISNAGAR
38
  Lockdown continues until mid – May 2020; moderate
relation after
Apr 15,2020 (end of 21deadline); restarting supply
chains and
 Scenario 2 normalizing production and consumption takes 3-4
months
 Stabilization and stimulus package, broader than
in Scenario 1
 Lockdown as in scenario 2, with additional 2-3
week lockdowns in
Q2 and Q4 FY 2021 because of virus resurgence
 Scenario 3  Low labor availability because of limited reverse
migration
 Stabilization and stimulus package even broader
than in Scenario 2

Approximate India GDP Growth, FY 2021 over FY 2020, %

Approximate India GDP Growth

FY 2021 over FY 2020

Scenario 3
-10

Scenario 2
-3

Scenario 1

2
-12 -10 -8 -6 -4 -2 0
2 4

Column3 Column2 Column1

In scenario 1, the economy could contract by about 10 percent in the first quarter
of fiscal year
2021, with GDP growth of 1 to 2 percent in fiscal year 2021. In this scenario, the
lockdown
would be relaxed after April 15, 2020 (when the 21-day deadline is due to expire),
with
appropriate protocols put in place for the movement of goods and people after that.
Our
economic modeling suggests that even in this scenario of relatively quick rebound,
the
livelihoods of eight million workers, including many who are in the informal
workforce, could
 SPCE,VISNAGAR
39
be affected. In other words, eight million people could have their ability to
subsist and afford
basic necessities, such as food, housing, and clothing, put at severe risk. And
with corporate
and micro-, small-, and medium-size-enterprise (MSME) failure, nonperforming loans
(NPLs)
in the financial system could rise by three to four percentage points of loans. The
amount of
government spending required to protect and revive households, companies, and
lenders could
therefore be in the region of 6 lakh crore Indian rupees (around $79 billion), or 3
percent of
GDP.

In scenario 2, the economy could contract sharply by around 20 percent in the first
quarter of
fiscal year 2021, with –2 to –3 percent growth for fiscal year 2021. Here, the
lockdown would
continue in roughly its current form until mid-May 2020, followed by a very gradual
restarting
of supply chains. This could put 32 million livelihoods at risk and swell NPLs by
seven
percentage points. The cost of stabilizing and protecting households, companies,
and lenders
could exceed 10 lakh crore Indian rupees (exceeding $130 billion), or more than 5
percent of
GDP.

Scenario 3 could mean an even deeper economic contraction of around 8 to 10 percent

for fiscal
year 2021. This could occur if the virus flares up a few times over the rest of the
year,
necessitating more lockdowns, causing even greater reluctance among migrants to
resume
work, and ensuring a much slower rate of recovery.

SPCE,VISNAGAR
40
[4.7] COVID – 19 Impact on Stock Exchange

This year, between January 10 and March 16, the six major stock exchanges (FTSE,
Nikkei,
Sensex, Dow Jones, NYSE and Hang Seng) around the globe witnessed an average 26%
(or
6.1K) points decline. Among these, the worst-impacted was the S&P BSE Sensex, which
shed
10.2K points resulting in a 25% decline between January 10 and March 16.

The coronavirus outbreak across the countries have hampered both the supply and
demand in
the local economy as a result of which major industry leaders have lowered their
forecasted
revenue for the last quarter of FY20. All these factors combined have impacted the
investor
sentiment in a negative way resulting in a market panic.

SPCE,VISNAGAR
41
[4.8] BSE Return during Crisis

BSE Sensex Return

100

80
77.9
60
60.2
40
47
20

0
-20.6
YEAR - 2000 YEAR-2008 YEAR-2011
-24.6 YEAR -
2020
-20 -28.6

-40 -52.4
-60

Current year Return Next 3 Year Return

The S&P BSE Sensex has reported its sharpest quarterly fall, with the benchmark
index
slipping 28.6 per cent in the January-March 2020 period. The markets have entered a
‘bear
phase’ following panic triggered by the rampant spread of Covid-19. A fall of 20
per cent or
more from the peak for a stock or an index is considered bear market territory for
that traded
unit.

The Sensex (down 23.8 per cent) recorded their worst performance in over a decade.
In 2008-
09, the Sensex had recorded a 37.9 per cent decline, while the Nifty slipped 36.2
per cent as
the global financial crisis roiled the markets and the economy.

Meanwhile, foreign portfolio investors pulled out Rs.58,348 crore (approximately

$7.9 billion)
from Indian equities in March 2020. It is the biggest monthly outflow, based on the
National
Securities Depository data available as far back as 2002.

Most analysts say the markets are factoring in the 21-day nationwide lockdown and
will track
developments related to the Covid-19 pandemic — both at the domestic and global
levels. Any
extension in the lockdown can further dent market sentiment.
 SPCE,VISNAGAR
42
[4.9] Equity Investors lost in 2020

Equity Investors Lost in 2020

33 36%

30-45%
loss
45-60%
loss
over
60 % loss
less
than 15% loss
14% 15-30%
loss
12%
4%

While the spread of Covid-19 is the main worry right now, investors are more
worried about
the economic impact of the lockdown. Experts say these fears are not unfounded,
because it
is not a financial market problem that can be addressed by monetary policies like
rate cuts,
quantitative easing or a fiscal stimulus. The real issue is the worldwide lockdown.
“The
economic pains triggered by Covid-19 and lockdowns are expected to last longer than
the
previous financial market crisis,” says Sampath Reddy, CIO, Bajaj Allianz Life
Insurance.
This means the market could go down further in the coming months. “First leg of the
fall has
already happened. The next leg may happen over the next 3-6 months”.

SPCE,VISNAGAR
43
[4.10] Economic Slowdown is the big worry now
The disease is scaring investors, but the impending slowdown is more
worrisome.

spread of COVID-
Economic
19
slowdown due to

lock down
37%

38%

Exit of domestic Exit of foreign

Investors Investors
8% 17%
Source:-
https://economictimes.indiatimes.com

Some even fear that there will be bigger global repercussions. “The US
administration has
failed to handle the Covid-19 situation correctly. So, it may try to shift the
blame to China by
starting a new trade war,” says a survey respondent Alok Ranisati.

As things stand, corporate earnings will be badly hit in the coming quarters. “It
will take a
few quarters for businesses to bounce back. By and large, the prices have factored
in about a
disturbance of one year,” says Vikaas Sachdeva, CEO, Emkay Investment Managers.

[4.11] Crash Attracting Investor

According to one study Crash attracting those who never invested before….
If they invest in bear markets like this and hold, they could get good returns in
long term.

Will you consider investing in stock now ????

Figures denote the % of respondents who have never invested in stocks. Only 10% of
respondents like that.

SPCE,VISNAGAR
44
 NO
30%

YES
70%

Source:-
https://economictimes.indiatimes.com/

[4.12] Lockdown Effect on Indian Trade

($ billion)

Trade Deficit

15.33

9.76

Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20
Mar-20

SPCE,VISNAGAR
45
The World Trade Organization (WTO) has projected global merchandise trade to
plummet
between 13% and 32% in 2020 due to the covid-19 outbreak. “The wide range of
possibilities
for the predicted decline is explained by the unprecedented nature of this health
crisis and the
uncertainty around its precise economic impact. But WTO economists believe the
decline will
likely exceed the trade slump brought on by the global financial crisis of 2008-
09," it said last
week.

Sharad Kumar Saraf, president, Federation of Indian Export Organisations, said with
cancellation of over 50% of orders, gloomy forecast, major job losses and rising
bad loans
among exporting units, the government should immediately announce a relief package
for
exporters as any further delay would be catastrophic. “The huge support given by
various
economies to exports will put Indian exports in further difficulties as when the
size of the cake
reduces, competition intensifies with focus on prices," he added.

World Bank in its latest South Asia Economic Focus said reduced external demand for
manufacturing as well as services exports will impact India. “One of India’s
largest exports is
business and professional services, consisting of business process outsourcing
(BPO) such as
technical support and call centres largely based in India. This sector is severely
affected.
Lockdown measures, both in origin and destination countries, have forced offices to
close as
their infrastructure is heavily geared towards in-office working. There is also a
concern that
external demand will drop precipitously even beyond the lockdown period, as clients
cut costs.
This situation will certainly mean fewer new projects, as well as the scaling back
of existing
ones," it added. However, the bank said India’s balance of payments position may
improve.
“Weak domestic demand, low oil prices and COVID-19-related disruptions are expected
to
narrow the current account deficit to 0.2% in FY21 and to keep it low in the
following years,"
it added.

[4.13] Lockdown Effect on Indian Import-Export

During FY20, India’s exports contracted 4.8% to $314.3 billion and imports shrank
9.1% to
$467.2 billion, leaving a trade deficit of $152.9 billion.
 SPCE,VISNAGAR
46
 Indian Import-Export
30

20

10 4.48
0
Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20
Feb-20 Mar-20
-10
0.64
-20

-28.6

-30

-40

-34.6
Export Import

 29 of 30 items each in export and import baskets contract, pointing to

severity of impact.

 During FY20, contraction in India’s exports and imports left a trade deficit
of $152.9
billion.
 India’s merchandise exports slumped by a record 34.6% in March while
imports
declined 28.7% as countries sealed their borders to combat the covid-19
outbreak.
 In February, merchandise exports had rebounded 2.9% after falling for
six months in a
row.

Of the 30 major items each in India’s export and import baskets, 29 saw a
contraction in March,
signalling the severity of the impact of the coronavirus pandemic on global demand.
Only iron
ore exports (58.4%) and import of transport equipment (11.9%) recorded a growth
during the
month.

Engineering Export Promotion Council chairman Ravi Sehgal said the sharp drop in
merchandise exports was not a surprise with major economies of the world in a state
of
lockdown. “April would be worse as international trade excepting medicine and
essential
supplies has come to a near halt. Exporters are facing a question of survival," he
added.

During FY20, India’s exports contracted 4.8% to $314.3 billion while imports shrank
9.1% to
 SPCE,VISNAGAR
47
$467.2 billion, leaving a trade deficit of $152.9 billion.

[4.14] COVID-19 Effect on Currencies Exchange

The rupees has not outlier among its Asian peers in bearing the brunt of COVID-19

PHILIPPINE PESO -1
JAPANESE YEN
PHILLIPPINE PESO -0.15
TAIWANESE
DOLLAR -0.24
CHINESE
RENMINBI -1.44
Axis Title

-5.34 SOUTH KOREAN

WON
-5.61

INDIAN RUPEE

-5.75 SINGAPORE
DOLLAR

-5.85 MALAYSIAN
RINGGIT

-8.78
THAI BAHT

-14.43
INDONESIAN RUPIAH

-16 -14 -12 -10 -8 -6 -4 -2

0
Axis Title

Updated: 09 Apr 2020

The rupee has held up well in a hostile global market where many emerging market
currencies
have fallen victim to the covid-19 outbreak.
The Indian currency hit yet another lifetime low of 76.50 per dollar on Thursday
and has hardly
been an outlier in the secular damage to emerging market currencies.
However, the rupee’s performance this time is far better than it was in the
previous two
episodes of sharp depreciation.
In the five-month period culminating with the collapse of Lehman Brothers in
September 2008,
the rupee had plummeted 15%. In 2013, five months following the US Federal Reserve
warning
of unwinding its stimulus, the rupee had lost 13%. In contrast, the currency has
lost just 7%
since mid-February.
What is working for it? Kamal Mahajan, head of treasury and global markets at Bank
of Baroda,
believes that the crude oil price collapse is a potent factor supporting the rupee.
“Crude oil is
very comfortable and we are not expecting prices at anywhere close to even $50 a
barrel. That

SPCE,VISNAGAR
48
is giving support to the rupee. Capital (non-oil) imports are also lower, which is
another
comfort," he said.
The collapse of global crude oil prices has been a boon for India as its import
bill is set to
reduce. A pleasant outcome of a bothersome slowdown is its effect on non-oil
imports.
Considering all this, economists expect the current account deficit to be small for
the current
fiscal year.
Analysts at JPMorgan (India) Pvt. Ltd note that external debt of the country at
$19.4 billion is
low compared with peers.
Add to this the fact that the Reserve Bank of India (RBI) has a huge pile of
foreign exchange
reserves to stave off pressure. The pressure on the exchange rate has meant that
the central
bank has been selling dollars incessantly and reserves may be down 3% in just two
months.
However, at $475.56 billion as of 31 March, they are still more than enough to ward
off external
sector pressures.
The icing on the cake has been the recent measures by RBI to allow greater freedom
to hedge
exchange rate risks. The local bond market has been opened up and rules governing
derivatives
have been simplified to allow more hedging options for companies and even non-
resident
Indians. The central bank has also allowed Indian banks to trade in the offshore
non-deliverable
forwards market.
However, all these positives are not prompting analysts to predict a strengthening
of the rupee
yet. That is because the virus outbreak is far from being contained in India and
the economic
impact is still unclear. Several positive factors are at play for the rupee and all
it needs is for
the covid-19 curve to flatten. Until then, analysts believe the pressure on the
currency would
continue, making it necessary for RBI to keep intervening.

[4.15] India’s Oil Demand

India's crude oil production fell 5.5 per cent in March from a year earlier amid
lockdown due
to coronavirus. The production plunged to nearly 2.70 million tonnes in the period,
provisional
government data showed. Similarly, the cumulative crude oil production in April-
March FY20
was 32.17 million tonnes which is 8.20 per cent and 5.95 per cent lower than target
for the
period and production during corresponding period of last year respectively, the
government
data also showed.

SPCE,VISNAGAR
49
The refiners processed about 21.20 million tonnes of oil last month which is 8.59
per cent lower
than the target for the month. It is 5.74 per cent lower compared with March, 2019.
The
cumulative production during April-March FY20 was 25.43 million tonnes which is
0.14 per
cent and 1.1 per cent lower than target for the period and production during
corresponding
period of last year. Many refineries have restricted production output with fuel
demand hit by
travel restrictions due to lockdown, the analysts have said.

India’s Oil Demand To Post Negative Growth in 2020

(forecast)

Negative Demnad of Oil

400

350

300

250

200

150

100

50

0
2015 2016 2017 2018 2019
2020
-50

-100

[4.16] Low oil prices are an opportunity for India to

Stockpile

This is the right time to shop crude. The question at this point of time is whether
India can stock
the cheap crude for its future use. The country has limited Strategic Petroleum
Reserve (SPR)
capacities compared to the US, China, Japan and South Korea and it explains the
missed
opportunity.

India is the world’s third biggest oil importer is planning to fill up its
strategic petroleum
reserves in the coming months. India’s combined capacity of 5.33 million mt in
three
 SPCE,VISNAGAR
50
locations in southern Indian – Vishakhapatnam, Mangalore and Padur – is just over
half
full.

The timing is close to perfect. There is a consensus among analysts that oil prices
will remain
under pressure. S&P Global Platts Analytics sees Brent crude trading below $20/b
over the
next couple of months before rebounding to $40/b by the year-end. Even the recovery
price is
low by recent standards and depends on the shape and timing of the recovery from
coronavirus
as people return to their cars.

India has decided to fill the strategic petroleum reserves (SPR) to their full
capacity and the
first consignment of 1 million barrels of crude has been procured through Indian
Oil, which
has been unloaded at Mangalore SPR, the Ministry of Petroleum and Natural Gas said
in a
tweet. More low-price crude oil cargoes are lined up to reach Mangalore port before
early May
to completely fill the Mangalore and Padur SPRs, it added.

2018-2019 2019-2020
(JAN-APR) (JAN-APR)
Crude Oil Import (billion) 95.3 87.7
Crude Oil Import Quantity (million tonnes) 190.2 188.4

Petroleum reserves are made to ensure energy security and it becomes more important
for India
because the country imports a major portion of its oil requirements. In fact, crude
oil is the
largest portion of India’s imports and thus it majorly determines the country’s
current
account. The Indian government has set up nearly 5 million metric tons (MMT) of
strategic
crude oil storages at three locations that are Visakhapatnam, Mangalore, and Padur.
These serve
as a cushion during any supply disruptions.

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 Chapter -5
Government and Others
Reliefs

SPCE,VISNAGAR 52
[5.1] Indian Government Relief

The Indian government relief package announced Friday consists of 1.7 trillion
rupees ($22.5
billion) in aid to the most vulnerable and includes provisions for struggling
small-scale farmers
and uprooted construction workers as well as poor families and seniors. Despite
being of
historical proportions for the country, the fund only covers a small part of
economic
losses expected due to the coronavirus in India.

The biggest group of beneficiaries can receive free cereals and pulses to cover at
least the most
basic necessities during crisis times. This applies to an estimated 800 million
Indians - two
thirds of country’s population -, who qualify for the aid under the PM Garib Kalyan
Yojana
scheme. 80 million also qualify for free cooking gas.

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53
200 million females who hold accounts under the Jan Dhan program for the unbanked
will
receive Rs. 500 a month for three months. Help will also go out to 87 million
small-scale
farmers, 30 million seniors, widows and disabled as well as 35 million construction
workers who will receive money from the Construction Workers Welfare Fund. More
groups, from health care workers to MNREGA (job creation) workers and professionals
in
small companies will receive aid.

But is the package enough? The fund is equivalent to less than 1 percent of GDP,
whereas
European aid packages have been providing aid to the tune of 20 percent of the
respective
countries’ GDPs. India is not stretching its deficit for the package, according to
local Bloomberg subsidiary Quint. Economists interviewed by the outlet also said
that Rs.
500 ($7) cash transfers were too low and that more aid was needed for the poor in
society
as well as workers and employers at the industry level.

[5.2] RBI Steps In With Relief

The Reserve Bank of India on Friday announced a host of further measures to support
the
economy and the financial system. The measures range from relief for banks in
classifying
bad loans to liquidity support for non-bank lenders and increased emergency funding
for state
governments.

In a statement, RBI Governor Shaktikanta Das said further measures were being
announced
to maintain adequate liquidity in the system, facilitate and incentives bank credit
flows and
enable orderly functioning of financial markets.

 LIQUIDITY

 In order to encourage banks to deploy surplus funds, the reverse repo rate
has been cut
by 25 basis points to 3.75 percent from 4 percent.

 The ‘ways and means advances’ limit for states has been increased by 60
percent to
about Rs 67,028 crore. This increased limit will be available till Sept 30,
2020. This
will prevent a rush of market borrowings from states.

 A second round of targeted long-term repo operations of Rs 50,000 crore will

be
conducted to “begin with” to ensure that microfinance lenders and NBFCs are
well
lubricated.

SPCE,VISNAGAR
54
  All-India financial institutions, such as Nabard, Sidbi and NHB, will be
provided a
special refinance facility of Rs 50,000 crore at the repo rate. This can then
be further
used for refinancing by non-bank lenders.

 BANKING SECTOR

 The moratorium period of three months will be excluded from the 90-day period
for
non-performing asset classification. This will mean that starting March 1, an
account
can remain in default for 180 days before it is classified as a non
performing asset.

 Banks will be required to make additional provisions of 10 percent for the

accounts
under standstill to ensure an adequate buffer is available with lender if bad
loans surge
at the end of that 180-day period.

 The RBI has also provided for an extension of resolution timeline by 90 days
over and
above the 210 days provided so far. As a result, banks will now have 300 days
to finalise
a resolution plan for a stressed account.

 In the case of loans given by NBFCs to commercial real estate, the ‘Date of
Commencement of Commercial Operations’ can be extended by one year without
attracting a downgrade in asset classification. This relief was already
available to banks
and is being extended to NBFCs and HFCs now.

 To preserve capital, the RBI has said that scheduled commercial banks cannot
announce
any dividend payouts from profits of the financial year ending March 2020.
This will
be reviewed after Sept. 30, 2020.

 The liquidity coverage ratio has also been brought down from 100 percent to
80
percent with immediate effect. This provides banks some liquidity relief as
they needs
to hold a lower proportion of ‘highly liquid assets’. The RBI hopes this
measure will
free up space for bank lending.

SPCE,VISNAGAR
55
[5.3] Stimulus Package of Different Countries

2 tn

610 bn 22.5 bn
424 bn 335 bn
218 bn
11.4 bn
78.8 bn 27.3 bn 15 bn
13.3 bn 10.5 bn

 The United States has implemented a $2 trillion stimulus package, the

largest in the
country’s history.
 The European Central Bank will spend over 1 trillion euros on Eurozone
bonds over
the next nine months.
 Canada has guaranteed C$2,000 a month to individuals affected by the
coronavirus
outbreak.
 Australia has guaranteed struggling businesses A$1,500 every two weeks per
employee.

 The Five G20 Countries with the Largest Coronavirus Stimulus Programs

1. United States: $2.3 trillion (11% of GDP)

2. Germany: $189.3 billion (4.9% of GDP)
3. China: $169.7 billion (1.2% of GDP)
4. Canada: $145.4 billion (8.4% of GDP)
5. Australia: $133.5 billion (9.7% of GDP)

SPCE,VISNAGAR
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 CHAPTER-6
SUGGESTION & FINDINGS

SPCE,VISNAGAR 57
[6.1] Economic revival amid Covid-19 outbreak
 Key demands and suggestions include improving liquidity, cutting customs
duties
and goods and services tax (GST) rates, expediting all refunds and a halt on
tax
scrutiny.
 With the economy at a standstill because of the lockdown, the Centre is
crowding in
ideas for revival from the industry.

 Key demands and suggestions include improving liquidity, cutting customs

duties and
goods and services tax (GST) rates, expediting all refunds and a halt on tax
scrutiny and
searches till the year-end.

 Officers across departments and ministries have been asked to speak to people
across
sectors for ‘SWOT' analysis of issues for revival of the economy. Besides
identifying
bottlenecks for various sectors, the government is also asking for a wish
list from the
industry at a time when the global economy is slipping into a recession.

 “The government recognizes that these are unprecedented times and industry
will have
to be taken on board to overcome the crisis. Ensuring liquidity is one of the
top
demands. However, all departments are trying to understand even micro issues
hurting
the industry,” said a government official.

 The International Monetary Fund (IMF) has cut India’s growth forecast for
FY21 in its
World Economic Outlook (WEO) report to 1.9 per cent from 5.8 per cent,
projected
in January. It pointed out that the outbreak will throw the world economy
into the worst
recession. Barclay’s slashed India’s growth projection for calender year 2020
to zero,
arguing that the economic impact will be worse than expected.

 Inputs have been sought under three heads – bottlenecks being faced by
sectors and
traders, wish list of the industry and ideas for revival of industry.

[6.2] Suggestion about Tax Structure

 The income tax department, for instance, has asked field officers to speak to
around 10
people across sectors that they have dealt with and submit suggestions by
Wednesday.

 The suggestions collated by officers so far include allowing auditors to get

special
permission to move even during the lockdown with results season round the
corner.
SPCE,VISNAGAR
58
 Another key demand pertains to expediting all tax refunds to improve liquidity
in the
system. The income tax department had recently announced expediting refunds up
to
Rs 5 lakh.

 Besides, there should be a hold on all scrutiny and search operations by the
tax
department till March 31, 2021, said another suggestion.

 Most are seeking extension of income tax return filing timelines for the
current fiscal
year,” said an official.

 On indirect taxes, the industry is seeking Customs duty cuts and reduction in
GST
rates on COVID and non-COVID related items. That has been ruled out by
officials,
who argue that it will open doors to Chinese imports and prove detrimental to
the
country’s ‘Make in India’ efforts.

 “The industry wants customs duty reduction and even GST cuts. They should
understand that it is not doable. However, we are compiling these ideas to be
discussed
at a broader level,” said another official.

 Rajat Mohan, partner, AMRG Associates, suggested that the tax administration
should
get strict orders not to harass any taxpayer.

 “Till next financial year, all kinds of notices and assessments shall be
deferred unless
any such delay is expected to cause irreparable damage to the public
exchequer. Every
correspondence with the tax officer, wherever needed, will be by way of email
communication only,” he said.

 Mohan added that while small and medium enterprises should be given complete
freedom from scrutiny assessment for FY20 and FY21, tax refunds Upto Rs 1
crore
should be processed on a provisional basis, based on self-assessment only.

 Gouri Puri, partner at law firm Shardul Amarchand Mangaldas and Co, said that
interim
measures such as triggering tax deduction and source (TDS) obligation only on
actual
payment basis, suspending deemed dividend and perquisite taxation on loans
given to
shareholders and employees in distress will help cash-strapped businesses.

SPCE,VISNAGAR
59
[6.3] Policy Suggestions for Reviving Economy Post Covid-19

 At the outset, the report should be junked and those who endorsed it must be
held
accountable for presenting ideas that would push the country back by decades,
if not
more.

 In a nutshell, the report has outrageous revenue suggestions, while the ones
on
expenditure are impractical and a consistent reminder of our old
macroeconomic
playbook.

 If India were to follow the expenditure recommendations presented in the

report, it will
certainly act as a permanent fiscal drag, have limited impact on growth and
cause
substantial damage to our long-term fiscal consolidation plans.

 There is talk of higher tax rates for the highest slab, additional cess on
incomes beyond
10 lakh rupees and an inheritance tax.

 The proposed ideas make sense for a developed country that has a rational
taxation
structure in an ordinary time.

 To my mind, there’s no example of a country increasing taxes during a growth

slowdown (in this case a severe economic depression) that ends up well.

 The proposed norms reflect the sad reality of India’s obsession with wonky
taxation
policies that have penalised wealth creation for decades.

 There was a start towards gradual rationalisation of tax rates since 2014 and
the
proposals seem to be undoing the progress that was made over the six years.

 Here’s a lesson for the IRS officials who are interested in understanding
taxation policy,
and to some extent public finance.

 Tax collections or revenue mobilisation depends on tax rates, growth rate of

income
and tax compliance

 To assume that by increasing tax rates, there’s an increase in revenue is too

simplistic
and untrue.

 A higher tax rate has a negative impact on growth and on tax compliances.
This is why

SPCE,VISNAGAR
60
 the Laffer Curve becomes extremely important as it illustrates how an
increase in tax
rate can reduce revenues, while a decrease in tax rate can increase
revenues.

 India, at present, has taxes which are comparable to some of the advanced
economies
even as the public services provided to citizens are poor compared to
even the middle
income countries.

 This shows the extent of mismatch in our taxation policies and

illustrates why we have
been unsuccessful in creating wealth.

 To then even think of increasing taxes shows the lack of expertise that
is prevalent
amongst our young and bright officials that would at some point in future
also work on
formulating taxation policies.

 The increase in tax rates, at a time when people are ‘dissaving’, and
wealth erosion
across assets and cash position has weakened across companies, makes no
economic
sense.

 It will not generate revenue but will certainly dampen economic sentiment
and weaken
the future outlook.

 This, in turn, would result in lower growth and pose challenges for
revenue mobilisation
that well extend to the future.

 To lack this kind of expertise and still be involved in formulation of

taxation policies is
only going to result in sub-optimal policy choices, which, therefore,
necessitates such
a module as part of their training.

[6.4] Economy Recovery After COVID-19

Data suggest that over percent Indian are optimistic about Indian economy recovery
and
expects rebound in 2-3
months.
It is difficult to predict if the post-Covid recovery will be V shaped (rapid
recovery after a
severe decline) or U shaped (prolonged slump before recovery). The former governor
of the
US Federal Reserve, Ben Barnake, suggested that the disruptions caused by the
pandemic are
akin to a snowstorm and unlike the long decline associated with the great
depression or the
GFC. If the virus does not reappear, the pent-up demand for consumption and
investment may
result in a rapid recovery. However, many experts worry that even after the
lockdowns are
 SPCE,VISNAGAR
61
lifted, economic activity will remain constrained until a vaccine is widely
available, which
might take more than a year.

ECONOMY RECOVERY AFTER COVID-19

Optimistics unsure Pessimistic

120

100 5 12 9
14
80 41
48 36 40
60

62
40
54
47 52 51
20

25
0 6
CHINA INDIA INDONESIA JAPAN
SOUTH KOREA

For India, the disruptions caused by Covid-19 provide an opportunity for an

economic reset.
Even prior to Covid-19, India's economic growth was declining due to low
consumption and
investment levels. The disruption in economic activity will reduce India's GDP
growth rate to
2% or lower. Perhaps this is the opportunity for the government to implement the
long-awaited
measures in the areas of infrastructure development, labour policy reforms, and
privatization
of state assets.

 Times of crisis lead to new opportunities

Google and PayPal were founded just two years prior to the dot-com crash. The
second
World War provided economies of scale to manufacture and laid the foundation of
global
leadership for American businesses. The balance of payments crisis in India in
1991 led to
economic reforms that helped establish the foundation
of modern India.
While globalization is here to stay, western economies and businesses will seek
to reduce
their reliance on China. Will Indian policy makers create the needed policy
support by
cutting red tape and improving infrastructure? Will Indian businesses be ready
to capitalize
on these new opportunities? As the saying goes, 'a crisis is a terrible thing
to waste'.

SPCE,VISNAGAR
62
 CHAPTER-7
BIBLIOGRAPHY

SPCE,VISNAGAR 63
 REFERENCES
 Research paper and Report of Rating Agencies

- FICCI Report

- KPMG Report

- The Indian Council of Medical Research (ICMR)

- Moody’s Report

- CRISIL Research Paper

- ICRA Report

- UN Reports

- World Bank Reports etc…..

 Newspapers

- Articles of time of India

- Economics Times

- Business Standards

- Business Todays etc….

 Government Reports and Circulars

 Research Journals and Publications etc…

 Published articles, online available interviews

 Internet, Websites

- https://www.who.int/docs/default-source/coronaviruse/situation-
reports/20200308-
sitrep-48-covid-19.pdf?sfvrsn=16f7ccef_4
- https://www.thehindubusinessline.com/economy/trade-impact-of-coronavirus-
for-
india-estimated-at-348-mn-un-report/article30988253.ece#
- https://www.livemint.com/.
- https://economictimes.indiatimes.com/news/economy/indicators/coronavirus-
chicken-

SPCE,VISNAGAR
64
 prices-fall-poultry-industry-affected/articleshow/74546189.
- http://ficci.in/spdocument/23195/Impact-of-COVID-19-on-Indian-Economy
- https://www2.deloitte.com/content/dam/Deloitte/in/Documents/tax/in-tax-
covid19-
likely-case-scenarios-for-indian-economy-noexp.pdf
-
https://economictimes.indiatimes.com/industry/healthcare/biotech/healthcare/icmr-
initiates-study-to-predict-the-rate-of-covid-19-infections-
inindia/articleshow/74768015.cms?from=mdr
- https://howmuch.net/articles/worlds-economic-programs-against-coronavirus
- https://economictimes.indiatimes.com/small-biz/sme-sector/covid-19-creates-a-
massive-2-billion-hole-in-indias-apparel-
industry/articleshow/75059596.cms?from=mdr
- https://economictimes.indiatimes.com/small-biz/sme-sector/covid-19-creates-a-
massive-2-billion-hole-in-indias-apparel-
industry/articleshow/75059596.cms?from=mdr
- https://economictimes.indiatimes.com/small-biz/sme-sector/covid-19-creates-a-
massive-2-billion-hole-in-indias-apparel-
industry/articleshow/75059596.cms?from=mdr
- https://economictimes.indiatimes.com/small-biz/sme-sector/covid-19-creates-a-
massive-2-billion-hole-in-indias-apparel-
industry/articleshow/75059596.cms?from=mdr
- https://economictimes.indiatimes.com/small-biz/sme-sector/covid-19-creates-a-
massive-2-billion-hole-in-indias-apparel-
industry/articleshow/75059596.cms?from=mdr
- https://economictimes.indiatimes.com/small-biz/sme-sector/covid-19-creates-a-
massive-2-billion-hole-in-indias-apparel-
industry/articleshow/75059596.cms?from=mdr
- https://economictimes.indiatimes.com/small-biz/sme-sector/covid-19-creates-a-
massive-2-billion-hole-in-indias-apparel-
industry/articleshow/75059596.cms?from=mdr

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