COVID-19 & INDIAN ECONOMY
Sustainability and scarcity remain the topmost concern for policymakers and academicians. Development remains the most vital motto for each nation, thereby to ensure this development the countries focus on many things like management of scarce resources to fulfill the unlimited wants, redistribution of income to reduce inequalities, maintenance of the stability of the price level, among many other steps.
But, what will you do if, even after focusing on all these aspects, you’ll face economic fluctuations which are uncontrollable? These fluctuations are uncontrollable because they didn’t arise due to any financial crunch, any liquidity issue, any international shock, or any stock market crash. The reason for these fluctuations is the current pandemic
The world has witnessed several epidemics over time such as the Spanish Flu of 1918, the outbreak of HIV/AIDS, SARS (Severe Acute Respiratory Syndrome), MERS (Middle East Respiratory Syndrome), and Ebola. However, the Novel Coronavirus or Covid-19 which originated in China in November-December 2019 has rapidly spread to almost all countries of the world and turned out to be one of the biggest health crises in history. The outbreak of COVID-19 brought social and economic life to a standstill. The virus outbreak has become one of the biggest threats to the economy and financial markets.
Initially, all the developed economies were struggling due to the fast pace of covid infection but after a few months, the virus hit the developing countries. It hit the Indian economy badly. As we know India is a fast-paced developing economy with a huge labor force of 500 million workers. Being part of a global village India was not immune to the virus. The government of India as well as state governments are treating and monitoring the situation closely to control the coronavirus pandemic. All the sectors have been adversely affected as domestic demand and exports dumped sharply.
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The Novel Coronavirus has caused a significant impact on individual lives, businesses, and the economy. This pandemic affected the manufacturing and the services sector—hospitality, tours and travels, healthcare, retail, banks, hotels, real estate, education, health, IT, recreation, media, and others. The Indian economy was already witnessing a slowdown in the last few quarters and the current pandemic is going to make the recovery even more difficult.
To curb the spread of the pandemic, the Government announced a 21-day national lockdown starting from March 25, 2020. This was a necessary step as it encouraged social distancing, which was the only way to break the cycle of infection. Though the supply and distribution of essential products & services were exempted during the lockdown, it is the most vulnerable sections of the society that are bearing the brunt of this. It has been observed that lock-down proved as a significant step to a greater extent but it was negatively affected most of the sectors of the Indian economy.
Here’s a brief look at how some major industries have been affected due to the pandemic
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.
Aviation and Tourism – One of the biggest hit industries, this sector has a high probability of suffering most from the recession without 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.
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 Atmanirbhar 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 a substantial trade deficit for India.
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.
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 an additional workforce and inflow of revenue in this sector.
Written By:- Dr. Pooja, Assistant Professor, Faculty of Education & Humanities