Coronavirus outbreak was first recorded in Wuhan, China, on 31 December 2019. Let’s learn about its impact on Indian economy.
Coronavirus (CoV) is a big family of viruses that causes illness. It varies from the common cold to more severe diseases like Middle East Respiratory Syndrome (MERS-CoV) and Severe Acute Respiratory Syndrome (SARS-CoV). The novel coronavirus is a new strain of the virus that has not been identified in humans so far.
WHO is managing closely with global authorities, governments, and other health organisations to provide advice to the countries about precautionary and preventive measures.
Impact of Coronavirus on the Indian Economy
To fight with COVID-19, the Indian Government extended the date of lockdown to 30th June 2020.
Lately, an industry study that is collectively conducted by industry body Ficci and tax consultancy Dhruva advisors and took replies from about 380 companies beyond the sectors. It is said that companies are engaging with “tremendous uncertainty” about their future.
As per the survey, COVID-19 is having a ‘deep impact’ on Indian companies, over the following month’s jobs are at great risk because companies are looking for some decrease in workforce. Moreover, it is added that already COVID-19 crisis has created an unprecedented failure in economic pursuits over the last few weeks.
The existing situation is having a “high to very high” level impact on their business as per almost 72 percent of respondents. Besides, 70 percent of the surveyed companies are awaiting a degrowth sales in the fiscal year 2020-21.
Ficci said in a statement, “The survey highlights that unless a substantive economic package is declared by the government immediately, we could see a lasting impairment of a large section of the industry, which may lose the opportunity to come back to life again.”
Let us have a peek at the sector-wise impact on Indian industry:
Chemical Industry: Several chemical plants have been closed down in China. So there will be limitations on shipments/logistics. It was discovered that 20% of the manufacturing had been affected due to the disorder in raw material supply. China is a notable supplier of Indigo that is needed for denim. Business in India is likely to get stirred, so people guarding their supplies. Though it is an opportunity, the US and EU will risk and expand their markets. Some of the businesses can be turned to India, which can also be taken as a benefit.
Shipping Industry: Coronavirus outbreak has affected the business of cargo movement service providers. As per the references, per day per vessel has dropped by more than 75-80% in dry bulk trade.
Auto Industry: Its influence on Indian companies will vary and depend upon the size of the business with China. China’s business, no doubt, is affected. Yet, current levels of the inventory seem to be enough for the Indian industry. If the closedown in China remains, then it is assumed to result in an 8-10% contraction of Indian auto manufacturing in 2020.
Pharmaceuticals Industry: Being one of the top formulations of drug exporters in the world, the pharma industry of India depends massively on import as of bulk drugs. Because of the coronavirus outbreak, it will also be affected.
Textiles Industry: Due to coronavirus outbreak, many garments/textile mills in China have suspended operations that, in turn, influencing the exportation of fabric, yarn, and additional raw materials from India.
Solar Power Sector: Indian developers may encounter unusual shortfall of raw materials required in solar panels/cells and limited stocks from China.
Ficci’s study revealed 53% of Indian businesses had indicated a marked impact of COVID-19 on business transactions. And 42% of the respondents stated that up to three months could take for normalcy to return.
Electronics Industry: The biggest supplier is China in electronics being a final product or raw material applied in the electronic industry. India’s electronic industry may suffer supply disturbances, production, reducing the impact on production costs due to massive dependency on electronics element supply directly or indirectly, and local production.
IT Industry: The New Year leaves in China has been prolonged due to coronavirus outbreak that negatively affected the revenue and development of Indian IT companies.
Tourism and Aviation: Due to the coronavirus outbreak, the inflow of tourists from China and from other East Asian territories to India will drop, which will affect the tourism sector and revenue.
An outbreak of COVID-19 affected the whole world and has been felt across businesses. The outbreak is certified as a national emergency by the World Health Organisation. In India, the three primary contributors to GDP, namely private consumption, investment, and external trade, will all get affected. The world and Indian economy is attempting to lessen the health risks of COVID-19 with the economic risks and necessary measures needed will be taken to improve it.
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