Financial support from

COVID-19 in India
Impacts on Production, Poverty & Food Systems
Barun Deb, Angga Pradesha and James Thurlow

International Food Policy Research Institute

Last updated: October 9, 2020

Contact: Angga Pradesha (a.pradesha@cigar.org) or Barun Deb (B.DebPal@cgiar.org)

Disclaimer: The analysis presented in this slide deck are the IFPRI team’s own
and does not necessarily reflect the views of IFPRI
 Updated: August 25, 2020

1 Preview of Results
Lockdown Imposes Heavy Economic Costs
Updated: August 25, 2020

• India’s GDP is estimated to have Economic impacts during 9-week

lockdown period
fallen by 30% during the country’s (changes are relative to a no-COVID scenario)
9-week lockdown
Percentage decline
(compared to a no-COVID scenario) in national GDP
30.3

• Food system is adversely affected Percentage decline

in agri-food system
by falling consumer & export GDP
5.0

demand
Percentage point
(agri-food GDP falls by 5%, despite exemptions
increase in national 21.9
to the agriculture sector) poverty rate

• National poverty rate increases by Decline in national

135.1
GDP in US$ billions
22%-points during the lockdown
(295 million more people temporarily living Increase in number
below the national poverty line) of poor people in 295.5
millions
Source: India SAM Multiplier Results
Costs Likely to Persist Throughout 2020
Updated: August 25, 2020

• Economy is gradually reopening Quarterly national impacts under faster

& many restrictions are easing or slower recovery scenarios
(changes are relative to a no-COVID scenario)

Q1 Q2 Q3 Q4
• But economic losses remain,
Change in
even with a faster easing -2% -2% -1%
-5%
-6%
quarterly
(GDP may be 9-13% lower in 2020 GDP -16%

compared to a no-COVID scenario) -26%

-30%

• Average GDP & poverty rates Faster recovery Slower recovery

for 2020 hide sharp mid-year

21%
19%

deteriorations Change in
national 10%
(many people & businesses may require
poverty rate
government support to cope & recover) 4%
3%
(National 1% 1% 1%
poverty line)
Q1 Q2 Q3 Q4

Source: India SAM Multiplier Results

 Updated: August 25, 2020

COVID-19 Outbreak & Lockdown

2 Policies in India
 COVID-19 Cases & Policy Timeline
Updated: August 25, 2020

The Ministry of Home Affairs

and the Government of India
The Prime Minister ordered further extended the lockdown Night curfews policy was
a nationwide lockdown policy removed. Gym and Yoga
restriction for 21 days facilities allowed to open but,
schools still closed
The Prime Minister
declared a COVID relief
package of INR 20
All domestic and Trillion ($US 273 billion)
international travel was
automatically suspended

The government finally

The lockdown policy was
decided to lift the
further extended by the
lockdown policy but still
government until May 3
First coronavirus banned any large
cases identified gatherings
in the country

120,000
100,000

Confirmed new cases

80,000
60,000
40,000
20,000
0
3-Jul
8-Jul
3-Jun
8-Jun

12-Aug
17-Aug
22-Aug
27-Aug

1-Oct
6-Oct
14-Apr
19-Apr
24-Apr
29-Apr

13-Jul
18-Jul
23-Jul
28-Jul
2-Aug
7-Aug
14-Feb
19-Feb
24-Feb
29-Feb

4-Apr
9-Apr
10-Mar
15-Mar
20-Mar
25-Mar
30-Mar

14-May
19-May
24-May
29-May

13-Jun
18-Jun
23-Jun
28-Jun

11-Sep
16-Sep
21-Sep
26-Sep
4-Feb
9-Feb

5-Mar

1-Sep
6-Sep
4-May
9-May
25-Jan
30-Jan

Confirmed daily new cases Data link

Sectors Affected by Lockdown Policies (1)
Updated: August 25, 2020

Sector Lockdown restrictions or exemptions in targeted regions Directly Affected?

• Farming activities exempted (essential sector)

Agriculture • Movement restrictions occurred just after planting for winter crops Minimal
• Limited extension visits to farms, suspended development projects

Mining & crude oil • Extraction operations shut down Minimal

• Food processing & medicines exempted (essential sectors)

Manufacturing • Movement restrictions affected many operations High
• Nonfood producing companies closed

Utilities • Electricity & water distribution exempted (essential sector) Minimal

Construction • Construction projects/sites closed, including most public works High
Wholesale & retail • Retailers of essential goods exempted, with limited trading times
• Social distancing restrictions affected market activity
High
trade services
• Air travel closed; cargo/freight transport exempted (essential sector)
Transportation,
• Inter-district passenger transit closed High
storage & cargo • Urban passenger transit reduced
Hotels & food • Hotels, restaurant, cafés, bars closed apart from take-away foods
• Limited delivery options for food or other products
High
services
Sectors Affected by Lockdown Policies (2)
Updated: August 25, 2020

Sector Lockdown restrictions or exemptions in targeted regions Directly Affected?

Banking, finance & • Banks operating through digital platforms

• Other financial institutions closed or teleworking (e.g., insurance)
Minimal
insurance

Professional & • Almost all closed or teleworking (e.g., legal, accounting services)
• Activities involving in-person field visits affected (e.g., engineering)
Minimal
business services
Public admin & • Public services & agencies remain open, but most staff teleworking
• Police & security services exempted (essential)
Minimal
law enforcement

• All public schools closed without much scope for online delivery
Education services • All private schools closed with some online materials
Some

• Health services exempted (essential)

Health services • Elective operations reduced but rising number of COVID patients
Minimal

Sports & • Sports & outdoor entertainment banned

• Some activities operating (e.g., newspapers, radio & TV)
High
entertainment

• In-person religious gatherings banned

Other services • Informal repair firms limited due to movement restrictions
High
Global & Other Nationwide Shocks
Updated: August 25, 2020

Sector Lockdown restrictions or exemptions in targeted regions Directly Affected?

• Reduced international tourism & business travel
Export demand • Lower export demand for mineral exports High
• Lower export demand for agricultural, other products

Remittances • Decline in value of remittances sent by nationals working abroad Some

Government Nationwide
• Fall in tax revenues due to decline in economic activity
Some
revenues

See detailed sector-level assumptions about production &

demand shocks in Annex at the end of slide deck
 Updated: August 25, 2020

3 Measuring Economic Impacts

Economywide Multiplier Analysis
Updated: August 25, 2020

• Lockdown policies & shocks have direct impacts on the operation

of certain sectors
e.g., closing businesses, restricting travel, etc.

• But they also generate indirect impacts on other sectors involved

in supply chains
i.e., input suppliers & downstream users

• Multiplier analysis uses sector input-output data to measure

direct & indirect impacts throughout & across supply chains
Includes impacts on GDP, jobs & household incomes

• India model based on 2017/2018 social accounting matrix (SAM)

& Household Consumption Survey 2011-12 (68th round)
(results scaled to 2019 GDP & employment levels)
Framework for Analyzing COVID-19
Updated: August 25, 2020

Domestic Impact Channels Direct Global Impact Channels

(Due to partial or full lockdowns in own country)
impacts (Due to partial or full lockdowns in other countries)

• Agriculture
• Export demand
• Mining & crude oil
• Remittances & migration
• Manufacturing
• Foreign direct investments
• Utilities (energy, water)
• Construction Indirect
• Whole & retail trade services
• Transportation, storage & cargo impacts
• Hotels & food services
• Banking, finance & insurance
• Professional & business services
• Public administration & law enforcement
• Education services
• Health & social services
• Sports & entertainment Economywide
• Community & other services
Impacts
GDP | jobs
Incomes | poverty
Impact Channels & Shocks
• Lockdowns are simulated using a
range of impact channels
• Shocks to each channel are imposed on
the model & impacts are simultaneously
traced across all supply chains
• Multiplier model separates entire
India economy into 86 sectors
(Shocks imposed on final demand that
leads to the fall in production)
• Shocks estimated using:
• Community mobility data from Google
• Press Note on Estimates of GDP for Q1,
2020-2021 from Ministry of Statistics,
Government of India
Updated: August 25, 2020
Impact channels used to replicate lockdowns
1 × Restrictions on farming
2 × Closing mining operations
3 Closing non-essential manufacturing operations
4 × Restrictions on energy and water supply
5 Restrictions on construction activities
6 Closing non-essential wholesale/retail trade
7 Transport/travel restrictions
8 Closing hotels, bars and restaurants
9 Closing non-essential business services
10 × Government work-from-home orders
11 Closing all schools in the country
12 × Restrictions on hospitals and clinics
13 Banning sports & other entertainment
14 Domestic workers & other services
15 Reduced export demand
16 Falling foreign remittances
17 Falling government revenues
× No direct losses via these channels in
India (e.g., exempted or no information)
Key Assumptions
Updated: August 25, 2020

• Lockdown period
• Government introduced national holiday for 9 consecutive weeks
(25 March to 31 May)
• 1-week lockdown period imposed in Q1 (January-March) while the
remaining 8-week imposed in Q2 (April-June)*

• Assumptions
• All shocks are imposed nationwide given the broad scope of the
government’s lockdown directive
• Shocks are weighted by importance of Q2-2020 for sectoral GDP
35%
30%
25%
20%
15%
10%
5%
0%
Total GDP Crude oil Crops Food processing Hotels & food services

Q1 Q2 Q3 Q4
* January-March is the fourth quarters of the government’s fiscal year (April-March)
Scenarios
Updated: August 25, 2020

1• Impacts during 9-week lockdown period (26 March to 30 May)

2 3• Impacts throughout 2020 by quarter

• Compare a faster vs. slower easing of restrictions

Full lockdown Easing Easing of Final easing by

period restrict- restrictions in Q3 end of Q4
ions (possibly incomplete
during recovery)
rest of
Q2

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

Q1 Q2 Q3 Q4

2 3
 Updated: August 25, 2020

Economic Impacts During the

4 Lockdown Period
GDP Losses During Lockdown
Updated: August 25, 2020

National GDP drops 30% during the 9-week lockdown

(most economic losses occur in the industry & services sectors)

Assumes restrictions are not expanded or reintroduced

Change in total GDP during Change in total GDP during

lockdown period (%) lockdown period (US$ bil.)
Total Agriculture Industry Services Total Agriculture Industry Services

-0.7% -$0.4

-$54.2

-$80.5
-30.3% -31.4%

-42.0% -$135.1

Source: India SAM Multiplier Results

 Sources of GDP Losses
Updated: August 25, 2020

Falling in construction activities & restrictions on non-essential

manufacturing activities account for half of national GDP losses

Contribution of lockdown restrictions & shocks to

loss in total GDP during lockdown (sums to 100%)
Limited labor supply during lock down
largely affected construction activities Limiting construction activities 29.5%
Large knock-on effects on
Reduced export demand 20.6%
manufacturing sectors, such
as textile industries
Closing non-essential manufacturing operations 20.5%
Fall in export due to disruption in
global market demand Closing non-essential wholesale/retail trade 15.5%

Transport/travel restrictions 14.3%

Restriction on people movement
reduced transport/travel services Domestic workers & other services 3.1%

Banning sports & other entertainment 2.3%

Closing schools has modest Closing all schools in the country 2.1%
negative GDP impacts
Closing hotels, bars and restaurants 2.1%
Remittances is important for household
incomes & consumption spending, Falling foreign remittances 0.9%
which indirectly affects GDP
Source: India SAM Multiplier Results
Impacts on the Agri-Food System
Updated: August 25, 2020

The largest impact from lock-down policy mainly hit food services,
while food supply is exempt from most restrictions
(food services are directly affected by the closing of hotels, restaurants & bars)

Change in agri-food GDP Change in agri-food GDP during the Share of

during lockdown period (%) 9-week lockdown period (US$ bil.) total GDP in
2019 (%)

-5.0% Agri-food
-$5.1 system Agri-food system (26.8%)

0.7% Agriculture $0.4 Agriculture (17.2%)

-6.1% Agro-processing -$0.5 Agro-processing (1.8%)

-11.9% Food trade and transport

-$3.5 Food trade and transport (6.8%)

-33.6% Food services -$1.5 Food services (1.0%)

Source: India SAM Multiplier Results

 Sources of Agri-Food System GDP Losses
Updated: August 25, 2020

Significant disruption on manufacturing and construction

activities created significant spillover impact to the food system

Contribution of lockdown restrictions & shocks to

Manufacturing and
construction activities are
worse affected reducing
household income and hence
food demand
loss in agri-food GDP during lockdown (sums to 100%)
Closing non-essential manufacturing operations 26.6%
Limiting construction activities 23.6%

Few agricultural exports directly Reduced export demand 15.8%

affected, but falling nonagricultural
exports reduces consumer incomes Closing hotels, bars and restaurants 13.5%
& food demand
Transport/travel restrictions 8.3%

Closing food services affected Closing non-essential wholesale/retail trade 7.1%

overall food demand
Falling foreign remittances 2.1%

Falling remittances are also more Domestic workers & other services 1.1%
important for the food system
because households spend a large Banning sports & other entertainment 0.9%
share of their incomes on food
Closing all schools in the country 0.5%

Source: India SAM Multiplier Results

Unpacking Agricultural GDP Impacts
Updated: August 25, 2020

Change in GDP during the lockdown (%)

(changes are relative to a no-COVID scenario)

-1% Agriculture Share of

agricultural GDP
0% Crops in 2019 (%)

Bumper harvest in Rabi season 4% Cereals (14.4%)

increased mainly cereal production
2% Pulses & oilseeds (6.8%)

2% Root crops (3.7%)

2% Fruits & vegetables (13.4%)

1% Sugarcane (3.5%)

-1% Beverage crops (1.4%)

Falling export demand hurts

export-oriented crops, like cotton -4% Traditional export crops (12.5%)

-1% Livestock

Decline in investment spending & -1% Meat & eggs (6.0%)

construction activities reduces demand

for timber & wood products -1% Dairy (24.3%)

-3% Forestry (7.6%)

Sluggish demand coupled with
disruption in transportation sector -3% Fishing (6.4%)
caused reduction in fish supply
Source: India SAM Multiplier Results
Unpacking Food Processing GDP Impacts
Updated: August 25, 2020

Combination of
Food processing
Change in GDP during the lockdown (%) and Beverages &
tobacco share
(changes are relative to a no-COVID scenario) make up 100%

Demand reduction from restaurant and other

services activities generate negative spillover -7% Food processing (91.9%)

effects on food processing industries.

-22% Meat (6.3%)

-28% Fish (13.0%)

-3% Dairy (3.6%)

Declines in meat, fish, fruits & vegetables
driven by falling consumer demand with -7% Fruits & vegetables (2.7%)
implications for dietary quality
-5% Fats & oils (3.9%)

-13% Cereal milling (34.6%)

Beverages & sugar refining badly affected by -2% Sugar refining (2.3%)
closure of hotels and restaurants
-5% Coffee, tea, etc. (13.1%)

-4% Other foods (12.4%)

-2% Beverages & tobacco (8.1%)

Source: India SAM Multiplier Results

 Impacts on Household Incomes
Updated: August 25, 2020

All households experience large income losses

(smaller losses for rural farm households because farming/food trade is exempt)

Larger income losses for higher-income households

(but we do not consider how these households have savings &
assets that can help smooth income shocks)

Change in household incomes during lockdown (%)

(changes are relative to a no-COVID scenario)
All households Quintiles 1-2 Quintiles 3-5 Rural Rural Farm Rural Nonfarm Urban

-12%

-23%
-25%
-29% -30%
-34% -33%
Source: India SAM Multiplier Results
Poverty Impacts During the Lockdown
Updated: August 25, 2020

National poverty rate increases by 22%-points during the

lockdown period (≈ 295 mil. more poor people)
(poverty rate is the share of the population with
consumption spending below the national poverty line)

Increase in share of population living Increase in number of poor people

in poverty during 9-week lockdowns in India during 9-week lockdown
(%-points) (mil.)
295.5
22.0%

210.5

21.9%

21.8% 84.9

National Rural Urban National Rural Urban

Source: India SAM Multiplier Results
 Updated: August 25, 2020

Economic Impacts Under Fast & Slow

5 Easing of Restrictions & Recovery
Recent Data | Changing Mobility
Updated: August 25, 2020

People’s movements suggest a slow “return to normal” activities

(changes in mobility relative to Jan-Feb activity)

40.0
Percent change from normal activity (Jan to mid Feb)

20.0

retail and
recreation
0.0
grocery and
pharmacy
-20.0 parks

transit stations
-40.0

workplaces
-60.0
residential

-80.0

-100.0
W3 W4 W1 W2 W3 W4 W1 W2 W3 W4 W1 W2 W3 W4 W1 W2 W3 W4 W1 W2 W3 W4 W1 W2 W3 W4 W1 W2 W3 W4
Feb Mar Apr May Jun Jul Aug Sep

Source: Google mobility data

Easing of Restrictions & Recovery
Updated: August 25, 2020

Predicting India’s “post-lockdown” period is challenging

Consider two stylized scenarios:
Faster easing: Economy rebounds strongly in Q3 & largely returns to normal by Dec 2020
Slower easing: Modest rebound in Q3 with productivity in Q4 still below pre-lockdown levels

Fast Recovery Slower Recovery

(faster easing & recovery) (gradual easing, slow recovery)
Jan
No lockdown restrictions or global shocks in this “pre-COVID-19” period
Q1 Feb
Mar
9-week lockdown (last week of March until end of May)
Apr
Global shocks start in late-March
Q2 May
Jun Losses reduced by 50% Losses reduced by 10%
Jul
Q3 Aug Losses reduced by 90% Losses reduced by 50%
Sep
Oct
Q4 Nov Losses reduced by 99% Losses reduced by 90%
Dec
GDP Impacts with Recovery Scenarios
Updated: August 25, 2020

National GDP is 9-13% lower over 2020 as a result of COVID-19

(given pre-COVID-19 growth trends, India may well lose more than a year of growth)

Change in quarterly & annual GDP under two recovery scenarios

(changes are relative to a no-COVID growth scenario)

Second quarter Quarterly averages Annual

April May-June Q1 Q2 Q3 Q4 2020

-1.1%
-2.5%
-4.8%
-6.5%
-9.0%

-13.2%
-16.3%
-18.7%

-26.4%
-28.1%
-30.3% -29.6%

Faster easing & recovery Slower easing & recovery

Source: India SAM Multiplier Results
Cumulative Quarterly GDP Losses
Updated: August 25, 2020

Even with faster recovery, India ends 2020 with lower GDP
(GDP losses accumulate each quarter & will take time to recover to pre-COVID levels)

Cumulative changes in 2020 GDP from end of 2019

(pre-COVID expected growth rate for 2020 was 7.5 % according to IMF’s 2019 Economic Outlook)

200
150
100
US$ billions

50 Pre-COVID expected growth

0
Lockdown + Faster easing & recovery
-50
-100 Lockdown + Slower easing & recovery
-150
-200
End of Q1 Q2 Q3 Q4
2019

Source: India SAM Multiplier Results

Poverty Impacts with Recovery Scenarios
Updated: August 25, 2020

Poverty should stabilize by end-2020 as people return to

work, incomes recover & consumer demand resumes
(but this hides sharp spike in mid-year poverty, when many households living close to
the poverty line will require government or other support to cope

Change in national poverty rate with fast or slow easing of restrictions

(changes are relative to a no-COVID growth scenario)
21.2%
18.5%

10.2%

3.8%
2.7%
1.4%
0.6%

Q1 Q2 Q3 Q4
Quarterly averages

Faster easing & recovery Slower easing & recovery

Source: India SAM Multiplier Results
 Updated: August 25, 2020

Detailed Assumptions About

A Production & Demand Shocks
Channels, Shocks & Affected Sectors (1)
Updated: August 25, 2020

Type of restriction or Major sectors Geography Size of shock Detailed subsectors affected by shock2
global shock affected2 affected1
Direct restrictions on Agriculture National 0% Crop/animal production, hunting, related service activities (D01); forestry, logging (D02);
farming (A) fishing, aquaculture (D03)
Limiting mining Mining, quarrying National 0% Coal, lignite (D5); crude petroleum, natural gas (D06); metal ores (D07); quarrying (D08);
operations (B) mining support service activities (D09)
Closing non-essential Manufacturing National -20% Food products (D10); beverages, tobacco (D11-12); coke, refined petroleum (D19);
manufacturing (C) pharmaceuticals, medicinal chemicals (D21); non-metallic minerals (D23); electromedical
operations equipment (G266)
National -50% Textiles, clothing, leather (D13-15); wood, paper, printing (D16-18); Chemicals, rubber,
plastics (D20-21)
National -45% Metals (D24-25); equipment, machinery (D26-28 excl. G266); vehicles, transport
equipment (D29-30); furniture (D31), other manufactures (D33)
Disruptions to energy Electricity, gas (D); National 0% Electricity, gas, steam supply (D35); water collection, treatment, supply (D36); sewerage,
and water supply water supply (E) waste collection/remediation (D37-39)
Limiting construction Construction National -50% Construction of buildings (D41); civil engineering (D42); specialized construction activities
activities (F) (D43)
Closing non-essential Wholesale/retail National -50% Agricultural raw materials, live animals (G462); agricultural machinery, equipment,
trading activities trade (G) supplies (C4653); food, beverages, tobacco, incl. stalls & markets (G463 G471-472 C4781)
National -50% Motor vehicle trade/repair (D45); wholesale trade (D46 excl. G462-463 C4653 C4663);
retail trade (D47 excl. G471-472 G47 C4781); construction materials, hardware, plumbing,
heating equipment (C4663); automotive fuels (G473)
Transport/travel Transportation, National -50% Postal/courier activities (D53); Freight rail/road/air transport (C4912 C4923 G512);
restrictions storage (H) transport via pipeline (G493); transport support (G522); warehousing/storage (G521)
National -50% Sea/coastal/inland water transport (C5011-5012 C5022); Urban/suburban
passenger/other land transport (C4911 C4921-4922)
National -50% Passenger air transport (G511)
Government work-from- Public National 0% Public administration, defense, compulsory social security (D84)
home orders administration,
defense (O)
Closing hotels, bars and Accommodation, National -30% Accommodation (D55); food/beverage service activities (D56)
restaurants food services (I)
Channels, Shocks & Affected Sectors (2)
Updated: August 25, 2020

Type of restriction or Major sectors Geography Size of Detailed subsectors affected by shock2
global shock affected2 affected1 shock
Closing non-essential Information, National -15% Publishing activities (D58); programming/broadcasting activities (D60);
business services communication telecommunications (D61); computer programming/consultancy activities (D62);
(J); finance, information service activities (D63); financial services, insurance, pension funding, auxiliary
insurance (K); real services (D64-66); real estate activities (D68); security and investigation activities (D80);
estate (L); accounting, bookkeeping, auditing, tax consultancy (G692); head offices, management
professional/ consultancy (D70); scientific research/development (D72); advertising, market research
scientific/technica (D73); other professional/scientific/technical activities (D74); legal activities (G692);
l activities (M); architectural/engineering activities (D71); veterinary activities (D75); motion
administrative/ picture/video/television program production, etc. (D59); renting/leasing activities (D77);
support services employment activities (D78); travel agencies, tour operators (D79); building services,
(N) landscape activities (D81); office administrative, office support, other business support
activities (D82)
Closing schools Education (P) National -10% Pre-primary and primary education (G851); secondary education (G852); higher education
(G853); other education (G854); educational support activities (G855)
Disruptions to hospitals Human health, National 0% Human health activities (D86); residential care activities (D87); social work activities
and clinics social work (Q) without accommodation (D88)
Banning sports & other Arts, recreation, National -40% Creative/arts/entertainment activities (D90); libraries, archives, museums, other cultural
entertainment entertainment (R) activities (D91); gambling, betting activities (D92); sports, amusement/recreation activities
(D93)
Domestic workers & Other service National -40% Membership organizations (D94); repairing computers & personal/household goods (D95);
other services activities (S); other personal services (D96); domestic workers/personnel (D97); other production
households as activities of private households for own use (D98); extraterritorial organizations/bodies
employers (T); (D99)
extraterritorial
organizations (U)
Note: (1) Channels, shocks, and affected sector in India are nationwide; (2) The magnitude of negative shocks on certain sectors is measured based on
daily people movement trend overtime according to their location collected by GOOGLE *. (3) numbers in parentheses are International Standard
Industrial Classification (ISIC Revision 4) codes (by major section with detailed subsectors, D is division, G is group and C is class).

*Source: https://www.google.com/covid19/mobility/