EFFECT OF COVID-19 ON INDIAN

ECONOMY 
 
Two years into the COVID-19 pandemic, we’ve learned a lot about resilience:
what makes us stronger, safer and more adaptable and what doesn’t. Now, we
need to focus on rebuilding our social, political and economic systems in ways
that empower and protect us all. The choices we make today how we choose to
allocate our resources and who we choose to lead us forward will have long-
term implications not just for women, girls and other vulnerable populations,
but for our overall health and survival as a species. COVID-19 is expected to
push an estimated 47 million additional women and girls into extreme poverty
and further widen the gender poverty gap.

COVID-19 changed the Indian economy in last two years. These are the main
parts of Indian economy which effected most during this pandemic period.

POVERTY

Women are being hit hard by the fallout of the pandemic. Because they
typically earn less, have fewer savings and hold less secure jobs to begin with,
women are particularly susceptible to economic shocks in general. The
pandemic has devastated feminized sectors like hospitality, tourism and retail,
depriving many women of their livelihoods.

THE SHARP DROP IN GDP IS THE LARGEST IN THE

COUNTRY’S HISTORY
From April to June 2020, India’s GDP dropped by a massive 24.4%.
According to the latest national income estimates, in the second quarter of the
2020/21 financial year (July to September 2020), the economy contracted by a
further 7.4%. The recovery in the third and fourth quarters (October 2020 to
March 2021) was still weak, with GDP rising 0.5% and 1.6%, respectively.
This means that the overall rate of contraction in India was (in real terms)
7.3% for the whole 2020/21 financial year. In the post-independence period,
India's national income has declined only four times before 2020 – in 1958,
1966, 1973 and 1980 – with the largest drop being in 1980 (5.2%). This means
that 2020/21 is the worst year in terms of economic contraction in the
country’s history, and much worse than the overall contraction in the world.

AGRICULTURE

The lockdown started when the harvest of India’s second agricultural crop
season had begun. Farmers were expecting good returns from the sale of their
produce. But they were disappointed by the breakdown of global and
domestic food supply chains and falling farm-gate prices. Globally, the
demand for Indian agricultural commodities fell due to the shutdown of
international trade. Domestically, farmers struggled to bring their produce to
the market yards due to the poor availability of transport facilities and
restrictions on the movement of goods.

INDUSTRY
India’s Index of Industrial Production (IIP), which stood at 134.2 in February
2020, fell to just 54.0 in April 2020. While it rose after April till July 2020, it
fell again in August 2020 and continued to be considerably below the levels for
February 2020 or August 2019. In a survey by the Federation of Indian
Chambers of Commerce and Industry (FICCI) in March 2020, about 53% of
the businesses had responded that the impact on them was either “very high”
or “high”. About 73% of the businesses experienced a “big” reduction in
orders; 35% reported a rise in inventories; and 81% reported a “significant”
impact on cash flows. About 52% indicated that the delay in sourcing
products was more than four weeks.

IMPACT ON EMPLOYMENT

The economic shutdown after March 2020 led to a major rise in

unemployment. Here, we use monthly data from the nation-wide employment
surveys of the CMIE. First, seekers of employment exited the labour force in
large numbers in March and April 2020. The size of the labour force shrank
in March and April 2020. There was some recovery from May 2020, but the
total size of the labour force in October 2020 was still lower than in February
2020 by 13.2 million persons.