Name:- Efaz Ahmad

Subject:- Marketing Management (KGNM_MMTA009)

NEPTUN Code:- NPVLFJ
Submitted to:- Prof. Dr. László Józsa

Question:- Analyze the effects of the Covid pandemic on your country's

economy ? (India)

The economic impact of the 2020 coronavirus pandemic in India has been largely disruptive.
India's growth in the fourth quarter of the fiscal year 2020 went down to 3.1% according to
the Ministry of Statistics. The Chief Economic Adviser to the Government of India said that
this drop is mainly due to the coronavirus pandemic effect on the Indian economy. Notably
India had also been witnessing a pre-pandemic slowdown, and according to the World Bank,
the current pandemic has "magnified pre-existing risks to India's economic outlook".
Unemployment rose from 6.7% on 15 March to 26% on 19 April and then back down to pre-
lockdown levels by mid-June. During the lockdown, an estimated 14 crore (140 million)
people lost employment while salaries were cut for many others. [1][3] More than 45% of
 households across the nation have reported an income drop as compared to the previous year.
The Indian economy was 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. Under complete lockdown, less than a quarter of India's $2.8 trillion economic
movement was functional. Up to 53% of businesses in the country were projected to be
significantly affected. Supply chains have been put under stress with the lockdown
restrictions in place; initially, there was a lack of clarity in streamlining what an "essential" is
and what is not. Those in the informal sectors and daily wage groups have been at the most
risk. A large number of farmers around the country who grow perishables also faced
uncertainty. Major companies in India such as Larsen & Toubro, Bharat Forge, UltraTech
Cement, Grasim Industries, Aditya Birla Group, BHEL and Tata Motors have temporarily
suspended or significantly reduced operations. Young startups have been impacted
as funding has fallen. Fast-moving consumer goods companies in the country have
significantly reduced operations and are focusing on essentials. Stock markets in India posted
their worst loses in history on 23 March 2020.

Adversely affected Sectors

 Apparel & Textile will get hit adversely due to disruption in labour supply, raw
material unavailability, working capital constraints and restricted demand due to limited
movement of people and purchasing ability.
 Auto sector (which includes automobiles and auto parts) will continue to face
challenges on account of lack of demand, global recession and falling income levels.
 Aviation and Tourism is one sector which has the highest probability of going under
without direct government intervention. In the next 12 months, it’s highly unlikely people
will travel for leisure apart from very essential travel.
 Shipping and Non-Food Retail – Non food retail chains and global shipping
businesses will find this 12 month period very challenging.
 Building & Construction businesses are generally leveraged and hence will face the
dual challenges of high-interest payments and lack of sales.
 Sectors with a possible uptick

 Digital & Internet Economy: Online based products & services companies will find
new takers
o Ed-tech and Online Education along with firms involved with online-skill
development
o Online groceries
o There will be a sudden spike in the demand for Content, with digital content
being in demand more than ever.
 FMCG & Retail will benefit immensely. With continued fear, food-based retail
chains, and companies catering to low-ticket consumption demand will emerge as winners. 
 Speciality Chemicals: Firms dealing in Chemicals will see a jump due to increased
demand for disinfectants, drugs and medicines.
 Pharma: Pharmaceutical firms are set to see growth in the near term.

Countries like China & India stand to benefit from low crude-oil prices and a younger
population which can kick in low-ticket consumption demand. While the world is
currently dominated by right-wing politicians who propagate the concept of ‘Make
Local, Consume Local’, the world will find comfort, once again, in the arms of
 capitalism. Free markets and abolishment of trade restrictions can be expected in the
Post-Covid 19 era.

Covid-19 Impact on India’s Economy: Challenges & Solutions

What can the Government do?

Like its counterparts across the globe, the Indian government has announced a slew of
measures to prevent total collapse:-

 Loosen its purse and spend money on infrastructure development –  ‘Rebuild India,
Rejuvenate India’
 Public sector financial institutions need to be further capitalized and nudged by the
RBI to lend out low-ticket loans below INR 1 Crore in the form of working capital to ensure
that liquidity comes back into the system
 Banking sector needs to be nudged to pass on rate cuts induced by RBI to the
borrowers
 Personal tax cuts & tax holidays for 6 – 12 months can be adopted to revive
consumption, which will help spur economic growth

Disruption of Supply Chain and Global Trade:-

Covid-19 has disrupted global supply chains and this is generating spill over effects
throughout different levels of supplier networks. Global trade in 2020 will fall in every region
of the world, and will affect all sectors of the economy. This will impact countries that are
strong exporters (no output for their local companies), but also those that are importers (lack
of raw materials). The World Trade Organization (WTO) expects global trade to fall up to
32% this year due to the coronavirus pandemic.

Conclusion:-
Developing countries like India has more fragile economic and social fabric and the present
situation will create more suffering for the unorganized sectors and migrant labour. Former
Reserve Bank Of India governor C Rangarajan said “Government of India must provide
lifelines to businesses - extend loans and tax waivers to small businesses and the self-
employed to retain staff -- give direct support to severely affected industries and provide
more funds to states, tax waivers to households etc.