IMPACTS OF COVID 19

BY
UZAIR KAZI
 GLOBAL IMPACT
❏ On April 9, 2020, the chief of International
Monetary Fund, Kristalina Georgieva said that
the year 2020 could see the worst global
economic fallout since the Great Depression in
the 1930s, with over 170 countries likely to
experience negative per capita GDP growth due
to the raging coronavirus pandemic.
❏ Aggregate Demand worldwide has collapsed and
non-essential expenditure is being postponed
due to the spread of Covid-19.
❏ Countries are facing two kinds of shocks – health
shocks and economic shocks.
❏ The impact of health shocks may be temporary
but the impact of economic shocks will take a
longer time to heal.
❏ Ever since the first outbreak of corona virus
(covid19) in Wuhan, China, the world has
changed in more ways than one.
❏ Apart from the devastating effects of the
pandemic, the death toll and struggling
healthcare systems, the virus has left the
economies world-wide staggering and even
drowning in many parts of the world.
❏ The lockdowns have hugely impacted the
supply-chain management and sent the GDP
and import-export cycle plummeting.
 INDIA IN COVID 19
❏ India is also facing the brunt as it is not
insulated from the economic shocks.
❏ India has a high population density and this
makes it more vulnerable.
❏ India’s population density is thrice that of
China along with a fragile state of health
infrastructure.
❏ The lockdown had brought the Indian
economy to a standstill and now we are
observing its after-effects.
❏ There are three major areas of impact for Indian
businesses which are linkages, supply chain and
macroeconomic factors.
 MACRO LEVEL
❏ The economic shock will likely be much more
severe for India, for two reasons.
❏ First, pre-COVID-19, the economy was
already slowing down, compounding existing
problems of unemployment, low incomes, rural
distress, malnutrition, and widespread
inequality.
❏ Second, India’s large informal sector is
particularly vulnerable.
❏ Out of the national total 465 million workers, around
91% (422 million) were informal workers in 2017-18.
❏ Lacking regular salaries or incomes, these
agriculture, migrant, and other informal workers
were hardest-hit during the lockdown period.
❏ Here, I focus on the likely impacts
on agriculture, supply chains, food
and nutrition security and
livelihoods.
 PRIMARY SECTOR
❏ Agriculture and supply chains
❏ COVID-19 is disrupting some activities in agriculture and
supply chains.
❏ Preliminary reports show that the non-availability of migrant
labor is interrupting some harvesting activities, particularly in
northwest India where wheat and pulses are being harvested.
❏ There are disruptions in supply chains because of
transportation problems and other issues.
❏ Prices have declined for wheat, vegetables, and other crops,
yet consumers are often paying more.
❏ Media reports show that the closure of hotels, restaurants,
sweet shops, and tea shops during the lockdown is already
depressing milk sales.
❏ Meanwhile, poultry farmers have been badly hit due to
misinformation, particularly on social media, that chicken are
the carriers of COVID-19.
 SECONDARY SECTOR

❏ Raw materials and Electronic parts –

❏ Nearly 55% of electronics imported by India originate
from China.
❏ These imports have dropped to 40% due to the
pandemic and hence Indian government came up with
the promotion of Atma Nirbhar or indigenous
production in a bid to reduce dependency.
❏ The lockdown has also resulted in reduced exports of
raw materials like organic chemicals, cotton, mineral
fuels resulting in substantial trade deficit for India.
❏ Pharmaceutical Industry –
❏ With a major percentage of Active
Pharmaceutical Ingredients (API) having to be
imported from China, the economic toll on this
industry is of major concern.
❏ With Covid spreading rapidly, the demand for
medication has become primary and a major
reduction in import of APIs adversely affects the
manufacturing of drugs which will inevitably
lead to a surge in drug prices.
❏ The pandemic of COVID-19 poses considerable
crisis on the health markets, including the
pharmaceutical sector; and identification of these
effects, may guide policy-makers towards more
evidence-informed planning to overcome
accompanying challenges.
❏ Auto Sector –
❏ Due to falling demands, income levels and
global recession, the manufacturing the auto
parts and automobiles have taken a major hit.
❏ With continuing lockdown, a downward slide of
this sector is expected.
❏ Textiles Industry –
❏ Due to the halting of operation of textile
factories in China, the export of raw materials
such as cotton, other fabric, yarn from India has
been majorly affected.
❏ The raw material unavailability, depletion in
work force and working capital constraints has
resulted in reduced demands and purchasing
capacities.
❏ Silver Lining –As we tread through this difficult period,
each industry is striving to sustain and deliver.
 TERTIARY SECTOR
❏ IT industry –
❏ The dependence of the IT sector on many of the above-
mentioned sectors such as manufacturing, retail, hospitality,
communication etc. has resulted in major impacts on
purchasing ability and investing patterns on IT services.
❏ This has impacted the requirement of additional work-force
and inflow of revenue in this sector.
❏ Education and E-learning–
❏ While the world that we live in has been evolving with time and
technology, a few things have always been primarily ‘old
school’, pun intended. Education and the way it’s imparted has
always relied mostly on the traditional methods of classroom
learning and teaching albeit with a comfortable integration of
technology where and when required.
❏ An integral approach was the most preferred, but the
devastating effects of the pandemic has left educational
institutions and educators with an immediate need to step up
and change the way education is delivered to the students.
❏ The imperative nature of quality of education is
something no one can compromise on and
educational institutions in our country have
seamlessly transitioned into e-learning and online
teaching with the unanimous goal of students’
progress and uninterrupted learning.
❏ It would not be an exaggeration if one were to
say that we embarked on e-learning within a
very short time. The efforts of the educators
who adapted to technology, video lessons and
live classes online cannot be understated.
With limited resources but enough passion,
educators across the world have been striving
hard and will continue to do to deliver quality
lessons and education.
❏ Aviation and Tourism –
❏ One of the biggest hit industries, this sector
has a high probability of suffering most from
the recession without the direct intervention
from the government. Since people are
unlikely to travel for leisure for months to
come, it will impact the inflow of tourists in all
the countries drastically reducing the money
flow in this sector.
❏ Restaurant services –
❏ The National Restaurant Association of India
(NRAI) which represent the majority of Indian
restaurants had advised its members to shut
down their dine-in services when the lockdown
began which majorly impacted the dine-ins, pubs,
cafes and also food delivery platforms such as
Swiggy and Zomato which faced drop of 60% in
revenue.
❏ The immediate impact of the pandemic was on the
service sector viz. travel, tourism and hospitality. Slowly
it affected the manufacturing, mining, agriculture, public
administration, construction etc. This impact reduces
the employment, income, consumption, investment as
these are dependent on each other.
MICRO LEVEL
WAYS TO RECOVER
❏ Most of India is yet to be built
❏ Pandemics and cities have a complicated history. London’s sewerage system was developed as a
response to public health crises, and Athens’ city laws and character changed drastically after the
Black Death.
❏ Future urban planning in India will contend with choices to grow outwardly or vertically with a clear
collective memory of the pandemic in the background. This is in addition to the grave public health
crisis of air pollution and huge congestion externalities that Indian cities deal with anyway.
❏ Ongoing developments in the megacities make it clear that we will reach decreasing returns to
their expansion, if we have not already reached there. We should instead focus on secondary
cities such as Ahmedabad, Pune, Bhopal, and others, and invest in human and physical
infrastructure.
❏ These new Indian cities should adopt transit-oriented, mixed-use urban planning with public transit
and EVs that expands the economic radius, frees up productive hours stuck in worsening traffic,
and reduces emissions and criteria pollutants.
❏ Services are easier to supply and monitor as opposed to the ad-hoc development that usually takes
place.
❏ Medium, small and micro enterprises (MSMEs) will need special help, requiring a multi-pronged
effort
❏ We hope as the economic activity resumes, the situation will get better gradually. It may take some
time to normalise, as consumer behaviour, shopping and spending pattern will change when the
social distancing norms get a relaxation under the vigilance & supervision of the administration
❏ While the nation is fighting hard against Covid and the health risks, the economic packages and the
measures in pipeline to revive the economy and the most affected sectors are the hopes that we
thrive on to crawl out of this major crisis that we are all in.
BIBLIOGRAPHY

https://www.theguardian.com/global-development/2020/apr/22/snapshots-of-a-worl
d-in-lockdown-the-crisis-has-crossed-a-new-threshold

https://www.ifpri.org/blog/addressing-covid-19-impacts-agriculture-food-security-an
d-livelihoods-india

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