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Covid 19 Effect on Indian Economy

Dheeraj Goel

01119202418

Research

Submitted to: Dr Shewta Gaur

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Abstract

Amid the Covid-19 crisis, three out of four Indians are experiencing their first recession. The

economic activity halted completely during March 2020 to April 2020. But after that when the

lockdown was eased and industries started their operations partially and even fully, Indian

economy gathered pace and momentum. Arrival of vaccines also helping India and its economy

to getting back on track. As a result, India's economy which was forecasted to remain flat to

negative earlier, is now forecast to grow at a slower pace of 8% in FY21, the IMF. has said in a

report. In this research paper, I will analyze the results about the impact on different sectors by

coronavirus and steps taken by Indian Government in order to revive the economy.
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Introduction

The outbreak of Coronavirus disease (COVID-19), first identified in Wuhan, China, in December

2019 and since then having spread globally, has been recognized as a pandemic by the World

Health Organization (WHO) on 11 March 2020. India is widely affected by this pandemic. As on

31.12.2020, more than 10 lakhs cases of Coronavirus have been confirmed in India with more

than ten thousand deaths. Taking into consideration its severe intensity, seen in the context of

India having the highest rate of density population in the world, the Governments, both at Union

and State levels, commenced necessary actions on war footing to prevent the spread of this

pandemic. The effect of Coronavirus is badly felt and noticed in the world's most developed

countries like the USA, Britain and Germany etc. Obviously, India was bound to be affected not

only because of its domestic slowdown but also because of international recession. Learning the

lessons from the developed countries like Spain and Italy, India put all its machinery and

material into motion to curb and/or prevent the disease. What started as one day Janta Curfew on

22.03.2020 by the Prime Minister of India and lockdowns by some of the state governments, the

entire country was declared to be under lockdown from the midnight of 24.03.2020, and the

same continues as of now.

Resultantly, everything and every activity, barring the activities relating to and concerning with

the essential supplies came to a complete grinding halt. Though the improvement in the

environment due to such a lockdown was a silver lining, however the toll on the economy due to

this lockdown is too early to be estimated.

While presenting the Finance Bill for the year 2020-21, the Union Government on 01.02.2020

had reasonably estimated India's nominal GDP growth rate (i.e., real growth + inflation) of 10
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percent, however, the same now seems far from reality and certainty. The slowdown in demand,

closure of production activities, fall in the global price of crude oil, ban on foreign trade, price

decrease in the commodities like energy, metals and fertilizers, restrictions on the aviation

industry as also on tourism, amongst others, are bound to exert downward pressure on the

inflation, thus adversely affecting the economy chart. It is believed that India's aggressive

lockdown could bring the country's growth down to 2.5 percent from 4.5 percent it had earlier

estimated. However, as per a statement released by Chief India Economist of Goldman Sachs on

09.04.2020, the economic growth of India has been estimated at a low figure of 1.6% only.

Overall uncertainty and lack of demand, coupled with no investment seen in near future, the

Indian stock markets crashed. A UN report estimated a trade impact of more than USD 350

million on India due to this outbreak, making India one of the top worst affected economies

across the world. During the same time, Asian Development Bank estimated the loss to Indian

economy due to this outbreak up to USD 29.9 billion. The worst crash of Indian stock market by

2352.6 points on one single day on 12.03.2020 is a cause of concern for all the Indian economists

and economic advisors. However, after the declaration of complete lockdown, Sensex and Nifty

gained a little, adding a value of about USD 66 billion to investors' wealth. The trend however

reveals that the curve has been meandric with absolute uncertainty.

Coronavirus had its impact in the industry in general, which has seen, not only cutting the

salaries but also laying off its employees. The hotels are vacant and airlines have closed their

wings. The live events industry has also estimated a loss of more than Rs. 3000 croresss. The

Economic Impact of the 2020 Coronavirus Pandemic in India has been largely disruptive. India’s
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growth in the fourth quarter of the Fiscal Year 2020 went down to 3.1 % according to the

Ministry of Statistics.

The Chief Economic Advisor to the Government of India said that this drop is mainly due to the

Coronavirus Pandemic effect on the Indian Economy. Notably India had also been witnessing a

Pre-pandemic slowdown, and according to the World Bank, the current Pandemic has

“Magnified Pre-existing risks to India’s Economic Outlook.”

In 2021, January-February the situation of pandemic improves as active cases in India dips

below 10k-30k and Indian vaccines come into picture but in April 2021, India witnessing its

second coronavirus wave and cases already started to climb. As of 13 April 2021, India

witnessing a daily rise of 1.5 lakhs covid infections. All the recovery hopes are already started to

reverse and new lockdown measures are taking place.

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Method of Data Collection

● Both primary and secondary data is used for collecting information.

● Primary data is the raw data that have been collected directly from main sources through

interviews, questionnaires, surveys, etc.

● Secondary data is the data that have been already collected by and readily available from

other sources. This is quite cheaper and easily accessible by all.

● Secondary data also saves time but primary data brings value to the data as it is more

realisic.
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Objectives

To find whether coronavirus will have an impact on Indian Economy or not

India's limited presence in the global supply chain network could help India with only a marginal

impact on its economy and could benefit from fall in global crude prices and fall in US treasury

bond yields, according to Bloomberg Economics, a Market Intelligence wing of Bloomberg

News. But the GDP data of April - June quarter 2020 vs April - June quarter of 2019 tolds a

different story as it shows the Indian GDP suffers the most due to lockdown followed by the UK,

France & Italy. The numbers are the worst since India started reporting quarterly data in 1996.

The origin of the virus, China seems to be the only country whose GDP remains positive.

As per Bloomberg data, India’s economy returned to growth last quarter, ending a recession in

time to battle new challenges posed by a surge in coronavirus infections. Also, India became one

of the few major economies to post growth in the last quarter of 2020, helped by a boost in

government spending and the reopening of the economy, which is primarily driven by domestic

consumption. But now what India sees is a fresh uptick in Covid-19 infections and that can halt
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the recovery hopes and what makes it even worst is that policy makers’ options are now limited

due to a global rout in debt markets that’s making it costlier to borrow.

Gross domestic product expanded 0.4% in the three months ended December after two

consecutive quarters of declines, the Statistics Ministry said. That was slower than the median

forecast for a 0.6% expansion in a Bloomberg survey of 36 economists.

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Problems faced by the Indian Economy due to Coronavirus

Coronavirus has pushed the Indian economy into recession. India reported its first ever negative

growth. Economic activity has been halted to enforce social distancing, industries have been

closed in order to avoid covid spread and complete lockdown across the country added misery

into the economy. The International Monetary Fund (IMF) and World Bank reports that the virus

has pushed the world economy into a recession worse than the 2008 financial crisis. Moody’s

downgraded India’s GDP growth rate forecast for 2020 from 5.5% to 2.5%. According to a

Trading Economics report (based on the data of the Ministry of Statistics and programme

implementation), inflation rate in India hit five years high. India is already suffering from an

economic recession since 2019 and the coronavirus just added more misery into it.

Upon comparison of five years unemployment data with United States, it shows that US is

heading towards V shape recovery in terms of unemployment but India after reporting marginal

improvement in unemployment data is heading towards another alarming crisis.

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The Coronavirus pandemic has had a huge impact on stock markets too. For the first time in

history. the world had witnessed negative oil futures prices because of storage issues. Also,

earlier in March 2020, fears of recession and uncertainty sent stock indices lower. When global

stock markets are suffering from high volatility, the stock market crashes in 2020 on March 9.

When global stock indices, like vertan Dow Jones, crashed to their lowest in a single day. This

movement has been recorded as the most severe since the global recession in 2008. Indices

continued to record further historical losses on March 12 and March 16.

Indian stock markets got affected by this too and in March the BSE Sensex plunged to close over

2,919 points, (or 8.18 percent), triggering a circuit breaker immediately after market opening.

Intraday records show that the index crashed as much as 3204 points, its biggest one-day drop.

The NSE Nifty suffered an equal decline of 8.30 percent in a day. Later for the first time in

history, trading in BSE/NSE got halted two times in a single week due as Nifty and Sensex hit

the lower circuit (10% decline) multiple times. But it’s important to mention that after that crash
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there is V shape recovery in markets too. Sensex which trades near between 41000-43000 levels

in January 2020, hit the record high of 50000 levels in December 2020 on vaccine rollout and

recovery.

Whole world makes a comeback against coronavirus and in the second half of 2020 some sectors

are returning to growth and picking up pace but the effect of coronavirus on the economy is

severe. Reserve Bank of India (RBI) Governor Shaktikanta Das said that the GDP growth rate

for the financial year 2020-21 is likely to be in the negative territory due to the severe impact of

the coronavirus pandemic.In media, Mr Das said that the pandemic has severely impacted the

global economy, including India's. He said that the pandemic has dealt a crushing blow to the

demand. Also, there are several rating agencies which downgraded India's rating as India

continued to report high no. of cases across the world. Since October, India has contributed

nearly 15% of the world’s total coronavirus count. But like markets and following the world

recovery path, there are some promising signs. The recovery is getting better and better and the

whole outlook which looks negative earlier is turning positive now.

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Rating Agency Before Revised Updation Updation (if

Covid (During (if any) any)
coronavirus
times)

IMF 5.8% 1.9% -4.9% -10.3%

(-8%) actual
estimation

Goldman Sachs 3.3% 1.6% -5% N/A

S&P Global Ratings 5.2% 3.5% 1.8% -10.3%

Swiss investment bank UBS 4% 2.5% -8.6% N/A

Moody 5.3% 2.5% -3.1% -11.1%

Fitch 5.2% 2% 0.8% -5%

Projection for India GDP growth by different rating agencies for 2020-21 (Based on data

reported by the media organisations)

According to the Economic survey 2020-21 (Ministry of Finance), India’s GDP is estimated to

contract by 7.7 per cent in FY2020-21, composed of a sharp 15.7 per cent decline in first half

and a modest 0.1 per cent fall in the second half.

Rating Agency Growth projection (India) for 2021-22

IMF 11.5%

Goldman Sachs 13%

Swiss investment bank UBS 11.5%

Moody 12%

Fitch 12.8%
Projection for India GDP growth by different rating agencies for 2021-22 (Based on data

reported by the media organisations)

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Sector wise data analysis

Aviation Sector.

Covid 19 has led to the halt of flight operations across the world. In India, all the flight

operations (both domestic and international) are suspended by the end of March 2020 to prevent

the further spread of the virus. This resulted in massive revenue loss for airlines and triggered a

sell off in aviation stocks and layoff. Employees were sent on unpaid leaves and faced salary

cuts.

The effect of this disruption can be determined by the loss figures of India's two largest airlines.

IndiGo incurred net losses of INR 2,884 crores and INR 1,194 crores in Q1 and Q2 of this fiscal

respectively. SpiceJet posted net losses of INR 600 crores and INR 112 crores in Q1 and Q2,

respectively. The passenger footfall across AAI airports saw a significant drop from 14.5 million

in January 2020 to 27,687 in April 2020. But as the economy opened up and public mobility also

resumed, it started picking up (2.97 million in August 2020).

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According to an interview given to Moneycontrol.com, Manvi Hooda, Practice Lead Consulting

& Research, CAPA South Asia, said that she expects pre-COVID traffic recovery by FY23. The

domestic sector may recover early, but international recovery is unlikely till mid- or end-FY23.

Hotel Sector

Coronavirus leaves no sector without affecting and hotel sector in many of them. According to

JLL's Hotel Momentum India (HMI) report, the Revenue Per Available Room (RevPAR) across

11 markets crashed by a whopping 70-90 per cent in the April-June 2020 period compared to the

previous year.
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This RevPAR fell 53% year-on-year basis during the January-September period due to an

adverse impact of the COVID-19 pandemic.

Consultancy firm ANAROCK estimates that the sector is likely to face a revenue loss of Rs

90,000 crores in 2020. Hotel occupancy, it noted, has only improved from approximately 10 per

cent in April 2020 to 26 per cent in September 2020.But as the lockdown restrictions lifted the

hotel industry has reported a 2.7 per cent de-growth in topline with flat operating margins at 22

percent in FY2020. The second half of 2020 slightly compensates for the poor first half.

Agriculture sector

This sector is one of the few ones which is marginally affected by covid 19. India’s agriculture

sector has shown its resilience amid the adversities of COVID-19 induced lockdowns. According

to the Economic Survey in the Agriculture year 2019-20 (as per Fourth Advance Estimates), total

food grain production in the country is estimated at record 296.65 million tonnes which is higher

by 11.44 million tonnes than the production of food grain of 285.21 million tonnes achieved

during 2018-19.
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Amid travel restrictions due to covid 19, the import-export business also gets affected but still

according to The Economic Survey 2019-20, India’s agricultural and allied exports amounted to

approximately Rs. 252 thousand crores. The major export destinations were the USA, Saudi

Arabia, Iran, Nepal and Bangladesh. The top agriculture and related products exported from

India were marine products, basmati rice, buffalo meat, spices, non-basmati rice, cotton raw, oil

meals, sugar, castor oil and tea. While India occupies a leading position in global trade of

aforementioned agri-products, its total agri-export basket accounts for a little over 2.5 percent of

world agri-trade. Also it was expected that the migrant crisis due to nationwide lockdown in

March will affect the harvesting process, which usually starts in mid-April but the results

delivered by the agriculture sector is better than expected that too without any major liquidity

boost.

E commerce Sector

The worldwide spread of the COVID-19 pandemic has disrupted how people buy products and

services and how they perceive e-commerce. The standardized lockdown rules across India and

the growing hesitation among consumers to go outside and shop for essential goods have tilted

the nation towards e-commerce. According to payment solutions provider platform Razrorpay,

when the lockdown was enforced in last week of March 2020, just in a week’s time, e-commerce

sites saw a dip of 2.40% in the orders placed. The highest dip in the entire year was seen in the

month of April, by approximately 10% while the highest spike is observed in July.

But it is noteworthy that after April, there has been a constant rise in the number of orders

placed, nfact the trend of shopping online going up and up.

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According to business growth data elicited from brands, e-tailers, e-commerce enablers and

analysts, Indian e-commerce, a $27-billion market in calendar 2019, is all set to achieve 40 per

cent growth in 2020, compared to 23 per cent growth in 2019.

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MSME Sector

This sector is the largest employment generator sector in India after agriculture.The estimated

number of MSMEs in India is 63 million and employs 110 million individuals. Indian MSMEs

produce more than 6,000 products for local and global consumption. According to DGCIS data,

the value of MSME related products in India is $147,390.08 million and contributed 48.56% of

total export during 2017-18. As per data, it contributes nearly 29% to Indian GDP. According to

a survey by Dun & Bradstreet, over 82 per cent of more than 250 small businesses in India said

that they had a negative Covid impact while 70 per cent believed their pre-Covid level recovery

to take nearly a year. Covid 19 also resulted in a job loss as business and cash flow were heavily

affected. A survey on micro, small, and medium enterprises conducted by SKOCH Group in

collaboration with Federation of Indian Micro, Small and Medium Enterprises; Bhartiya Vitta

Salahkar Samiti, and Tax Law Educare Society showed that estimated 25-30 million have lost

jobs by the end of June.

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FMCG Sector

In the years preceding up to the pandemic, India's FMCG sector is undergoing substantial

changes. Since mid-2018, the sector has been slowing, but Covid 19 has only worsened the

decline. Despite improved demand and a stock market boom in the FMCG sector, the data

indicates that the sector's difficulty persists.

The coronavirus has been around us for a while now and changed our approach towards life.

Hygienic lifestyle, etc are becoming an essential part of our lifestyle. Consumer behaviour is

changing fast and such types of changes affect brands too. The consumer's purchasing power is

decreasing as a result of the economic slowdown, and the consumer is purchasing only what he

or she requires. The extra spending which we consider as Fizzol Kharcha’ in India has drops

significantly and has a direct impact on FMCG sales.

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IT Sector

With all business going virtual during the COVID-19 recession, the Information Technology (IT)

sector has been one of the least impacted in terms of hiring. Demand for professionals in both the

software and hardware sectors was consistent and even the sector has experienced an upward

trend in month on month (M-O-M) recovery peaking in September 2020 for both hardware and

software roles.

According to a report from the job search website naukri.com, the IT-Hardware sector grew by

10% in September compared to the pre-COVID period of February. IT-Software, on the other

hand, is still lagging behind pre-COVID levels, falling by 28% in October. Recruiters are hiring

for different roles including software developer, tech lead, database architect, and solution

architect. Demand for technical content developers, solution architects, and database architects

has increased by 350 percent, 150 percent, and 100 percent, respectively.
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Pharma Sector

The coronavirus outbreak and subsequent shutdown wreaked havoc on all major sectors of the

economy, yet it turned out to be a blessing in disguise for India's pharmaceutical industry.

Though some aspects of the pharmaceutical industry were impacted, such as the supply chain

and the import of active pharmaceutical ingredients from China, Covid-19 provided some

opportunities in the pharmaceutical sector, particularly in India.

In 2020, the overall growth rate has been reduced to 2.2 percent. According to the November

2020 moving annual turnover (MAT), the Indian pharmaceutical sector was worth Rs 1.44 lakh

crores. The domestic market is expected to triple in the next decade, according to the Indian

Economic Survey 2021. The domestic pharmaceutical market in India is estimated to be worth

US$ 41 billion in 2021, rising to US$ 65 billion by 2024 and expected to reach US$ 120-130

billion by 2030.
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Steps Taken by Government

Gareeb Kalyan Yojana (March 26, 2020): It is a INR 1.7 lakh crores scheme which includes

direct benefit cash transfers, free LPG, grains and pulses for the poor while the middle class

would be able to withdraw funds from their Employees Provident Fund (EPF) account.

1. Allocation of Rs 31,000 crores funds for building and construction workers to state

governments.

2. EPFO to allow 75% non-refundable advance or 3 months of wages whichever is lower

3. For the next three months, Ujjwala beneficiaries will receive free cooking gas (LPG)

cylinders; will benefit 8.3 croress BPL families

4. Collateral-free loan doubled to INR 20 lakh to 63 lakh women self-help groups; to impact

7 crores households.

5. Government will pay EPF contribution, both of employer and employee, for 3 months for

all those establishments with less than 100 employees out of which 90% earn less than

INR 15,000 per month.

6. Direct benefit cash transfers of Rs 2,000 to farmers, MGNREGA, poor widows,

Pensioners & divyangs.

7. An ex-gratia of INR 1,000 to 3 crores poor senior citizens, poor widows and poor

disabled.

8. Women Jan Dhan account holders: They will get an ex-gratia amount of INR 500 per

month for 3 months to run the household during this period.

9. 1 kg dal will also be given for free to the poor.

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10. Prime Minister Garib Ann Yojna to ensure that each one will get an additional 5 kg rice

or wheat per month in addition to the existing scheme.

11. Health workers to get medical insurance cover of INR 50 lakh

Atmanirbhar Bharat Abhiyan: It is a Covid-19 Stimulus package 2020 announced by the

central government on May 12, 2020. Also, it’s a sizeable economic stimulus package (USD 280

Billion or INR 20 lakh croress, 10% of GDP).

Break-up of the Stimulus package:

1. Earlier measures: INR 1,92,000 crores: Free food grains and cooking gas announced for

the poor. In addition, cash for some sections in March 2020

a. Revenue lost due to tax concessions announced since March 22: INR 7,800 crores

b. PM Garib Kalyan Package: INR 1,70,000 crores

c. PM's announcement for health sector: INR 15,000 crores

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2. 1st Tranche: INR 5,94,550 crores: Includes funding — as well as loan guarantees — for

small businesses, non-bank lenders, distribution companies and salaried workers.

a. Emergency working capital facility for businesses including MSMEs: INR 3 lakh

crores

b. Subordinate debt for stressed MSMEs: INR 20,000 crores

c. Fund of fund for MSMEs: INR 50,000 crores

d. EPF support for businesses and workers: INR 2,800 crores

e. Reduction in EPF rates: INR 6,750 crores

f. Special liquidity scheme for NBFCs, HFCs and MGIS: INR 30,000 crores

g. Partial credit guarantee scheme 2.0 for liabilities of NBFCs and MFIs: INR

45,000 crores

h. DISCOMS: INR 90,000 crores reduction in TDS/TCS rates: INR 50,000 crores

3. 2nd Tranche: INR 3,10,000 crores: Focuses on migrant workers, small farmers and the

lower strata.

a. Free food grain supply for migrant workers for 2 months: INR 3,500 crores

b. interest subvention for MUDRA Shishu loans: INR 1,500 crores

c. Special credit facility for street vendors: INR 5,000 crores

d. Housing CLSS-MIG: INR 70,000 crores

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e. Additional emergency WCF through NABARD: INR 30,000 crores

f. Additional credit through KCC: INR 2 lakh crores

4. 3rd Tranche: INR 1,50,000: Facilitates farmers, and such sectors as food processing and

allied activities.

a. MFEs: INR 10,000 crores

b. PM Matsya Sampada Yojana: INR 20,000 crores

c. TOP to TOTAL: INR 500 crores

d. Agri infra fund: INR 1 lakh crores

e. Animal husbandry infra development fund: INR 15,000 crores

f. Promotion of herbal cultivation: INR 4,000 crores

g. Beekeeping initiative: INR 500 crores

5. 4th + 5th Tranche: INR 48,100 crores: The fourth includes structural reforms in 8

critical industries. These include Coal, Minerals, Defence Production, Airspace

management, Social Infrastructure Projects, Power distribution companies, Space sectors

and Atomic Energy. The fifth tranche included allotting USD 5.3 Billion to MNREGA

scheme, educational and health reforms, and IBC reforms.

a. Viability gap funding: INR 8,100 crores

b. Additional MGNREGA: INR 40,000 crores

RBI measures: INR 8,01,603 crores

Total: 20,97,053 crores

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Distressed Assets Fund - Sub-ordinate Debt for MSMEs (June 25, 2020): According to the

scheme, the guarantee cover worth Rs 20,000 crore will be provided to the promoters who can

take debt from the banks to further invest in their stressed MSME units as equity.

Infusion of INR 20,000 crores into PSBs via recap bonds (September 15, 2020): State-run

banks are to get 20,000 crore in recapitalization bonds, as the coronavirus issue threatens to

increase bad loans throughout the banking sector.

Special festival advance scheme (October 12,2020): Under this scheme, all central government

employees are eligible for a Rs 10,000 interest-free advance in the form of a prepaid RuPay

Card, which must be spent before March 31, 2021 and is to be paid back in 10 instalments. The

disbursement of this scheme is around INR 4000 crores.

Also, all government employees can use the LTC Cash Voucher scheme to get the cash amount

to leave encashment plus three times the ticket fare to buy items that have a GST of 12 percent or

higher.

'Aatmanirbhar' package 3.0 (November 20, 2020): The government has announced a new

package of initiatives costing around Rs. 1.2 lakh crore to increase job creation, offer financial

support to stressed industries, and stimulate economic activity in the housing and infrastructure

sectors. This is the third instalment of the Aatmarnirbhar Bharat campaign.

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1. Atmanirbhar Bharta Rozgar Yojana: This scheme will incentivise the creation of new

jobs. During COVID-19, new workers employed by EPFO-registered organisations will

be eligible for benefits. If EPFO-registered businesses hire new employees or replace

those who have lost their employment, the government will compensate them.

2. Emergency Credit Line Guarantee Scheme: The emergency credit line guarantee

scheme (ECLGS) has been extended through March 31, 2021 for MSMEs, enterprises,

MUDRA borrowers, and people (loans for commercial purposes). A credit guarantee

programme for the health-care industry and 26 other industries that have been impacted

by the COVID-19 epidemic has also been introduced.

3. Production-Linked Incentive: The PLI scheme worth ₹ 1.46 lakh crore is being offered

to 10 champion sectors which will help boost the efficiency and competitiveness of

domestic manufacturing.For the next five years, a total of 1.5 lakh crore has been set

aside across industries.

4. Pradhan Mantri Awaaz Yojana Urban: An additional expenditure of 18,000 crore over

the budget estimate has been announced for the PM Awaaz Yojana Urban, which will

help ground 12 lakh houses and complete 18 lakh houses. This would result in an

additional 78 lakh employment and an increase in cement and steel production and sales.

5. Relaxation of Earnest Money Deposit (EMD): Government contracts in the

construction/infrastructure sector will have their performance security reduced from

5-10% to 3%. EMD will no longer be required for bid tenders, with the Bid Security

Declaration taking its place. The exemptions will be in effect until December 31, 2021.
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6. Income Tax Relief for Developers and Home Buyers:For homes worth up to 2 crore,

the finance ministry announced tax relief for developers and home buyers. For primary

sales of residential units up to 2 crore, the difference between circle rate and agreement

value in real estate income tax will be increased from 10% to 20% until June 30, 2021.

The reduction in income taxes encourages the middle class to purchase homes.

7. Equity Investment in Debt Platform by NIIF: The government will invest 6,000 crore

in the debt platform of the National Investment and Infrastructure Fund (NIIF), which

will help the fund raise 1.1 lakh crore by 2025 for infrastructure financing.
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Conclusion

At the time of writing this research paper, India is dealing with the deadly second wave of

coronavirus. On an average, India is reporting more than 1.5 lakhs new covid cases daily &

nearly 3.5k deaths daily between April-May. All economic activity is halted due to partial/full

lockdown imposed by respective state governments to curb the spread of virus. Back in

November 2020 to March 2021, the most debated V shape recovery was taking place but these

new restrictions due to the second coronavirus wave has transferred the idea of V shape recovery

into a cold bag.

The worst part about this is, we can stop this second wave before time by vaccinating people en

masse as this time we had multiple vaccines in hand (Covieshield & Cowaxin) but the

government had some other priorities & mismanagement. Experts are now predicting a W shape

recovery for India. It’s probably like a game of alphabets, one chooses V, second chooses W,

third chooses U. The Reserve Bank of India said the resurgence of Covid has dented but not

debilitated economic activity in the first half of the first quarter of 2021-22.
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Rating agencies, on the other hand, have cut India's growth forecasts, predicting that the

country's economic recovery will be affected by the second wave of infections.

● Moody's has projected growth of 9.3 per cent for current fiscal, lower than 13.7 percent

estimated earlier.

● According to S&P Global Ratings, growth may decline to 9.8% in a 'moderate' scenario,

and as low as 8.2% in a 'severe' scenario. S&P had previously predicted 11% growth for

the current fiscal year.

● According to Fitch Ratings, India's sluggish vaccination rate could leave the country

exposed to additional pandemic waves.

As per the official estimate, the country's economy is projected to contract by 8 per cent in

2020-21.

According to report published in theprint.in, these four factors will shape how Indian economy

rebounds from shock of Covid second wave:

● Fear of disease vs fear of lack of healthcare

● Most Indians can’t afford to stay home

● Impact of deaths

● Consumption and demand inside and outside India

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