MAJOR RESEARCH PROJECT

On
Impact of financial crises on Indian economy due to Covid-
19

Submitted To
Devi Ahilya University, Indore
For partial fulfilment of the requirement for the Degree of
Master of Business Administration (Financial Administration)

Guided by: - Submitted by:-

Dr. Shailesh singh thakur Saurabh Mishra

IPS ACADEMY, IBMR

Rajendra Nagar, A.B. Road, Indore- 452 012(M.P.)
Affiliated to: Devi Ahilya Vishwavidhyalaya, Indore
1
 PREFACE
The bookish knowledge of any program, which we get from educational institutions, is not

enough to be used in our day-to-day life. The more practical knowledge we have, the more

beneficial it is for our learning.

To make the students aware of the working of the business world every student of MASTER OF

BUSINESS ADMINISTRATION (FINANCIAL ADMINSTRATION) – 3rd SEMESTER has

to

undergo a major research project where he/she experiences many aspects of business under

the supervision of Professional Managers.

I strongly believe that the knowledge gained from this experience is more than the

knowledge gained from the theories in the book.

PLACE: INDORE

Saurabh Mishra
DATE:
2
 CERTIFICATE

This is to certify that Mr. Saurabh Mishra Student of Institute of

Business Management and Research, IPS Academy, Indore of MBA (Financial
Administration) program has prepared Major research Project report on topic
“Impact of financial crises on Indian economy due to Covid -19” under my
guidance.

Internal Examiner (Guide) External Examiner

Director

IBMR, IPS Academy

3
 STUDENT DECLARATION

I Saurabh Mishra student of Institute of Business Management and Research, IPS

Academy, Indore of MBA (Financial Administration) program has prepared Major
research Project report on topic “Impact of financial crises on Indian economy
due to Covid-19”.

The Research as per my knowledge is original and genuine and not published in
any research Journal previously.

Saurabh Mishra

MBA (3rd sem)

2021-2023

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 ACKNOWLEDGEMENT

I often wondered why the project reports always began with acknowledgement. Now, when I

have undertaken project myself, did I realize that project report involves not just the

researcher but so many people that help in making the research possible. Therefore, I take

pleasure in beginning the most beautiful part of the report.

I fall short of words to express my gratitude to my guide Dr.Shailesh singh thakur who despite

their busy schedule were able to find some time to guide me through trouble and solve my

problems to the best of abilities. Without their unfailing guidance, encouragement and

patience this project would not have been possible. It has been a learning experience under

him/her. I am thankful to my faculty guide Dr. Shailesh singh thakur who gave me

detailed instructions during my MRP.

5
 INDEX

Chapter Particular Page no.

1 Introduction 7-10
1.1 Background of the study
1.2 Aims and objectives
1.3 Research problem
1.4 Study limitations
2 Review of literature 11-23
3 Rationale of study 24-29
4 Objectives 30-32
5 Government Actions 33-39
6 Research Methodology 40-44
7 Analysis & interpretation of results 45-50
8 Findings 51-52

9 Conclusion 53-55
10 Bibliography 55-57
Chapter 1

14
Introduction

7
 INTRODUCTION

This chapter introduces the subject of the study which is the Impact of financial crises on
Indian and global economy due to Covid-19 and also outlines the motivation of the study
including aims and objective of the study. This is also followed by definition of research
problems and limitation of the research.

1.1 Background of the study

Coronavirus disease 2019 (COVID -19) is defin ed as illness caused by a novel coronavirus
now called severe acute respiratory syndrome coronavirus 2 formerly called 2019 -nCoV),
which was first identified amid an outbreak of respiratory illness cases in Wuhan City, Hubei
Province, China. It was initial ly reported to the WHO on December 31, 2019. On January 30,
2020, the WHO declared the COVID -19 outbreak a global health emergency. On March 11,
2020, the WHO declared COVID -19 a global pandemic, its first such designation since
declaring H1N1 influenza a pandemic in 2009.

Illness caused by SARS -CoV-2 was termed C0VID -19 by the WHO, the acronym derived
from “coronavirus disease 2019”. The name was chosen to avoid stigmatizing the virus’s
origins in terms of population, geography, or animal associations. On February 11, 2020, the
coronavirus Study Group of the international committee on Taxonomy of virus issued a
statement announcing an official designation for the novel virus: severe acute respiratory
syndrome coronavirus 2.

Unemployment rose from 6.7% on 15 March to 26% on 19 April and then back down to
prelockdown levels by mid -June. The Indian economy was expected to lose over 32000 crore
(US$4.5 billion) every day during the first 21 days of complete lockdown, which was
declared following the coronavirus outbreak.

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While there is no way to tell exactly what the economic damage from the global COVID-19
novel coronavirus pandemic will be, there is widespread agreement among economists that it
will have severe negative impacts on the global economy. Early estimates predicted that, should
the virus become a global pandemic, most major economics will lose 2.4 percent of the value
their gross domestic product (GDP) over 2020, leading economists to already reduce their gross
domestic product over 2020, leading economists to already reduce their 2020 forecasts of global
economic growth down from around 3.0 percent to 2.4 percent.

1.2 The Aims and Objective of the study

The study aims to make an assessment of COVID-19 on Indian economy by analysing its impact
growth, manufacturing, trade and micro, small and medium enterprise (MSME) sector, and
highlights key policy measures to control the possible fallout in the economy. The impact of the
pandemic across sectors and in different scenarios of complete, extended and partial lockdown,
and at different levels of capacity utilization is massive on the Indian economy and

Global economy. India’s economy may barely manage to have positive growth of 0.5% in an
optimistic scenario but also faces the negative growth and same situation like this all over the
world economy. This year is the worst year of Indian and world economy. The impact of the
various sector of the economy like trade, manufacturing and tourist sector. The likely impact of
COVID-19 from the best case scenario to worst scenario are as follows: manufacturing sector
may shrink from 5.5 to 20 percent, exports from 13.7to 20.8 per cent, imports from 17.3 to 25
per cent and MSME net value added from 2.1 to 5.7 per cent in 2020 over previous year.

1.2 Research problem

In another report entitled COVID-19 and the world of work: impact and policy responses by
international labour Organization, it was explained that the crisis has already transformed into
an economic and labour market shock, impacting not only supply but also demand.

International Monetary fund’s chief said that, ‘world is faced extraordinary uncertainty about
the depth and duration of this crises, and it was the worst economic fallout since the Great
depression. The IMF estimated the external financing needs for emerging markets and
developing economics in trillions of dollars. India too is groaning under the yoke of the
pandemic and as per news reports in economics Times published on 23 March 2020, the
economists are pegging the cost of the COVID-19 lockdown at US$120 billion or 4 percent of
the GDP.

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1.3 Study Limitations
Study is based on fact and circumstances as available till the date of conclude this paper. All
information and data are available as per current situation as materialized. Impact of the novel
corona virus called as COVID-19 a global pandemic may very time to time. Study carried out
on the basis of first phase lockdown. Hence result may very on the basis of lockdown period,
number of infected cases, recovery rate, death, government policies as decided time to time
etc.

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 Chapter 2
Literature Review

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 REVIEW OF LITERATURE
The ongoing COVID-19 pandemic is causing unprecedented disruptions to economic
activities across countries, and India is no exception. The pandemic has severely affected
and continues to disrupt domestic production network, trade, services and MSMEs thereby
affecting overall growth and welfare. The current pandemic is working its way through a
highly globalized world with interconnected financial markets and production networks.
The complete lockdown and currently the ongoing partial lockdowns have both demand
side and supply-side effects on the Indian economy. On the supply side, the restrictions of
movement of goods, services and personnel affects the production networks.
The plunge in economic activities and overall output growth leads to employment loss.
The supply shocks will further create demand-side effects by

reducing the economy’s disposable income, savings and giving rise to unwanted
uncertainty.
Therefore, the economic impact of COVID-19 is expected on every sphere including
growth, international trade, financial markets, unemployment, income, poverty and many
more variables. The impact of the virus spread is expected to lead to a huge loss as global
trade is severely affected. The Indian growth model depends on the export-led-growth, and
hence can experience massive impact on growth due to lockdown amidst the virus spread.
On the international trade front, it is expected to plunge in a range of 13–32 per cent under
optimistic and pessimistic scenarios, respectively (WTO, 2020). In another estimation,
McKibbin and Fernando (2020) utilized the computable general equilibrium (CGE)
modelling and reported that global GDP would be reduced by around US$2.4 trillion in
2020 under a low-end pandemic considering the Hong Kong Flu as a reference point.
However, the fall can extend to the tune of over US$9 trillion in 2020 in case of a serious
outbreak similar to the Spanish flu. Ozili and Arun (2020) noted the spill over effects of
COVID-19 and hailed that the social distancing measure of virus controlling led to the
shutdown of financial markets, corporate offices, businesses and events which in turn may
have significant impact on economic growth. As per the International Labour Organization
(ILO) estimation, the total value added of industrial enterprises in China declined by 13.5
per cent during the first 2 months of 2020 (National Bureau of Statistics of China, 2020).
There are many projections and estimations by institutions and scholars on the economic
fallout of COVID-19 pandemic. Though there are variations in degree and magnitude of
the fall out, now there is a reasonable amount of coconscious that the economic impact
would be severe on the world economy and also on Indian economic growth, much more

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 than the global financial crisis (GFC) of 2008. IMF in its latest estimate in June 2020
projected that the global economy may shirk by 4.9 per cent, almost three times more than
GFC, and the Indian economy is likely to witness 4.5 per cent negative growth for the
2020.

With regard to the impact on employment and income, ILO (2020) estimated that global
unemployment can range between 5.3 million and 24.7 million from a base level of 188
million in 2019 pushing these people towards below poverty line. Most of existing studies
have focused on global growth, trade and unemployment, a few are country specific
especially India. In this context, the present study aims to make an assessment of
COVID19 on Indian economy and highlights key policy measures to control the possible
fallout on the economy. The study contributes the existing literature while analysing the
impact on Indian economy with more focus on growth, trade, manufacturing and MSMEs.
The detailed procedure of the assessment is reported in the next section.
List of sectors and Impact Assessment

Manufacturing sector

In order to find the impact at industry level, we rely on Annual Survey of Industries (ASI)
data for registered manufacturing firms. Here we take the average values of net value
added for FY 2016, FY 2017 and FY 20183 as base values for estimation. We have the
wage expenses as well as fixed cost components, viz. interest and rent expenses across
industries. First we compute the loss for each scenario using the base net value added
(NVA) of each industry. The we also compute the cost component (wages as well as fixed
cost, assuming these costs to remain with the firm even if without operation amid
lockdown) and calculate the cost for each scenario for each industry. Here we have
excluded two industries: food products and the pharmaceutical products. We add on the
loss of NVA to the cost during lockdown for a particular scenario, and thereby compute
the total loss for each industry. Then we take the average NVA of FY 2014, 2015 and
2016 as the previous base of NVA. Presentation is made as follows:

Percentage decline in NVA of all industries as compared to previous benchmark period (FY
2014–2017) . Also, we take the NVA loss as per cent of total NVA of base value (FY 2015–
2018).
Then we find the composition of NVA loss as per cent of total NVA of base period across
industries for scenario B only.
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Percentage decline in the NVA of each industry while comparing the base period NVA after
loss with the NVA of benchmark period . International Trade
Aggregate trade: We compute the loss of trade in two formats: first, we describe the exposure
of India’s exports and imports with the severe coronavirus-affected countries. Second, we
compute while following the similar practice as of GVA loss computation.
We are given the values of exports and imports till the first quarter of 2020. Here we estimate
the exports and imports from Q2 to Q4 for year 2020 by applying the quarterly growth (YoY)
of past year 2019. Then we compute the loss for Q2 and Q3 under scenarios A–D. We do not
compute the loss for Q1 of 2020 as the data are already released wherein significant decline is
observed due to COVID-19. In case of scenario A, we would be having the loss in exports
and imports for only second quarter. With this loss of Q2 we compute the percentage of
overall exports/imports of year 2020. Similarly, we calculate the loss of exports for the
remaining scenarios. We follow this approach for all the scenarios except scenario E. In fact,
all the scenarios A–D are relevant from India’s trade perspective. However, it is equally
important to see the impact on trade when world trade is also experiencing a massive decline.
In order to account for the issue, we take the hypothetical scenario E wherein the percentage
decline in quarters during the global financial crisis is taken as reference point assuming that
the corresponding decline was tuned to the fall in global trade. Exports saw the highest
decline of 31.9 per cent in 2009–2010 Q1 and imports of 31.7 in the next quarter. We
consider the lowest decline as weight factor for Q1 of 2020 and then give highest decline as
weight to the Q2 and then apply the weights in declining order to the subsequent quarters (Q3
and Q4) of 2020. Then the loss in exports is computed with the weighted average of exports
of Q1–Q4 of 2020. Similar exercise is performed for imports while taking the percentage
decline in imports of corresponding period of GFC.

The presentation of exports/imports losses are presented three-folds.

1. Percentage decline in exports/imports in CY 20 as compared to the level of

CY19.

2. The export/import loss as percentage of estimated exports/imports of 2020.

3. The quarterly growth rate (YoY) for 2020 and compare them with the growth of
corresponding quarter of previous year 2019.

Sectoral trade: As similar to manufacturing sector wherein we identify the highest loss
bearing industries, we calculate the potential loss across principal commodities to know
the most sensitive sectors of international trade amid COVID-19 pandemic. Here we take
the average values of exports/imports of 2018–2019 and 2019–2020 (both from April to
January) as base values for loss computation. While applying the lockdown of 40 days on
the base year values across principal commodities, we compute the nominal loss for each
commodity and finally to the all commodities. After computing the loss, we follow three
approach for presentation of impact assessment:

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[Type here]

. COVID-19 pandemic has it the Indian economy when it is at its lowest point of
growth trajectory over last 6 years due to lack of aggregate demand—
consumption, private investment and exports witnessing deceleration over the
last few years. When all were expecting a turnaround in the economy, the
COVID-19 pandemic has almost given a knocking punch affecting economic
activity across the sectors and added a supply shock to the economy. The
quarterly growth

(YoY) of GVA has been consistently declining (Figure 1) since first quarter of
2018
(from approximately 8% in Q1 in calendar year (CY) 2018 to 4.5% in Q4 CY
20194). Mining and quarrying witnessed the highest fall in recent quarters followed
by manufacturing and construction sector.

Figure 1. Quaterly Growth Rate in GVA Across Sectors (YOY,%)

Source :- Authors’ computations from NAS Data.

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[Type here]

Overall, our assessment throws a picture where the growth may vary from
near 0 to −7 per cent in best- and worst-case scenario. We believe India’s
GDP may shrink in the range of 3–5 per cent in CY 2020. The fallout in
economic growth is grounded on the weak response of economic
fundamentals. Most importantly the slugg ish demand in the country and globe
amid shutdown will be a pull factor for slowdown. With rising uncertainties, the
deferment of investment is most likely which in turn reduces the employment
opportunities and further lowers the disposable income thereby pressing the
demand on lower side (see, Garg & Sahoo, 2020). The unemployment due to
COVID-19 pandemic runs into millions across countries. Further, there is
mounting pressure from supply side as the lockdown in India and across the
countries has given a severe shock to supply chain (Ozili & Arun, 2020). The
domestic production networks are experiencing the shortage of raw materials,
components and forced to bear the higher cost. The manual labour supply
chain has been badly disrupted and the close down of industries may also
lead to loss of skills who are tuned to industrial processes. Therefore, the
negative growth for the CY 2020 looks feasible. The banking sector —the
major financer to economic activities and backbone of India’s financial
sector—may witness rising NPAs with falling revenues of the corporate sector,
MSMEs and falling income of households. The bad balance sheet with rising
NPAs will limit the credit flow thereby undermining the effect of liquidity
measures taken by RBI in terms of selling bonds to the banks and reducing
the repo rate.

Figure 3. COVID-19 Impact: GVA 2020 over 2019 (%)

Source: The authors

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[Type here]

Figure 4B. Quarterly Growth in GVA with Normal PAD

Source: The authors

Figure 5. Sectoral Deceleration (%) in GVA32(2020 over 2019)

[Type here]

Source: The authors

The percentage fall in the shares of different sectors in total GVA and percentage
fall in the respective sectors’ GVA for 2020 under different scenarios assuming the
over capacity of PAD services is reported in Figures 6 and 7, respectively. In case of
V-shaped recovery (scenarios A and B), the total estimated GVA loss by these sectors
are 6.5 per cent and 8.8 per cent respectively while under U-shaped recovery
(scenarios C and D) the loss would be around 10.44 per cent and 11.88 per cent,
respectively, for the year 2020 (Figure 6). Across the scenarios (A–D), the share of
decline of sectors in total GVA varies in the range of 1.9 per cent to 3.4 per cent for
trade, hotels and restaurant, 1.7 per cent to 3.1 per cent for manufacturing, 1.7 per cent
to 3.2 per cent for financial real estate and professional services and, 0.8 per cent to
1.5 per cent for construction and 0.3 per cent to
0.5 per cent for mining and quarrying. In terms of expected fall in respective sectors’
GVA, following are ranges starting from scenarios A–D, viz. 11.8–20.7 per cent 8 for
mining and quarrying sector; 11–20 per cent for construction 10–18.8 per cent for
manufacturing; 10– 18 per cent for trade and hotels services; and 8–15 per cent for
finance, real estate and professional services ( Figure 7).

Figure 6. Decline in Total GVA by Sectors (%)

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Source: Authors’ computations based NAS Data.

Figure 7. Decline in Respective Sectpors GVA (%) Source:

Authors’ computations based NAS Data.

Our assessment reveals a pessimistic picture for aggregate GVA and across broad sectors.
The impact on trade, hotels and restaurant are inevitable amid overall slowdown of
economic activities, massive plummet of global trade and the social distancing. The
estimated fall in financial services, real estate and professional services looks realistic
given the overall expected slowdown, as the performance of these sectors depends on
economic activities across other sectors. Moreover, with poor balance sheet of corporate
and household sectors, financial services would remain vulnerable in the possibility of
growing NPAs, and thereby fueling the problem of liquidity crunch, eventually impeding
the supply side issues in the economic activities.

Construction sector has been on the downturn since 2012 and more so in last couple of
years9 due to slowing demand, twin balance sheets problems in both corporate sector and
banking sectors, delayed projects and new regulation (RERA act 2016). The fall in
construction sector affects core sectors like steel, power and coal. Therefore, the backward
linked sector like mining and quarrying has been affected and will continue to get affected
in FY 20,21 due to COVID-19 pandemic. Now with the lockdown, the uncertainty has
increased wherein people prefer to postpone the big ticked purchases thereby dissuading
the demand further. The pressure on construction sector is also mounting with global trade

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situations where imports are getting difficult and also expensive due to weaker rupee.10 In this
environment of sluggish demand, the pass-through effect of increased input cost is not
feasible. Besides, more than 30 per cent construction workers are staying away from
work sites due to fear over Coronavirus infection, thereby adding the problem of the
sector to resume the new normalcy. The expected fall in manufacturing is obvious due to
shut down of firms during lockdown, slowdown of demand, shock to both local and
global supply chain, displacement of manual labour force, etc.

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Chapter 3
Rationale of Study

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Rationale of study
A micro virus has eroded wealth and corroded investor confidence, slowed-down private
consumption and investment, disrupted workplaces and distorted markets. Economic

Survey 2019–2020 had laid out a plan to promote exports of network products, to
integrate

‘assemble in India for the world’ into Make in India and to create 40 million jobs by
realising the aspiration of a 5 trillion economy by 2025 (Economic Survey, 2020, p. 100).
The COVID-19 pandemic has forced us to rethink on these strategies. Integration with
global supply chains also makes the nation susceptible to global supply shocks. The
survey had mentioned, ‘As no other country can match China in the abundance of its
labour, we must grab the space getting vacated in labour-intensive sectors’. The
COVID19 pandemic posed a huge threat to the mainstay of global production because the
mobility of Chinese migrant workers was restricted and the production activity had come
to a halt. Half of the humanity at present is under lockdown, and if lockdown persists, in
the rest of the world, lost sales in Chinese firms will result in layoffs, cuts in investment
spending and a deep recession. A rise in demand for commodities, if the virus does not
get contained, will increase prices, even when there is a global supply shock and
unemployment rates are high, and that is when stagflation sets in. The Indian economy
will be largely protected from these global upheavals because Indian producer, except in a
few sectors, is not a participant in global supply chains.
Global firms, in an attempt to bring down costs, have left themselves dangerously
exposed

to supply chain risks. The global industry relies on ‘Just in Time’, refurbishment of
products and thus, they maintain very low inventories. China is a manufacturing
powerhouse with a 16 per cent share in global exports and 7 per cent of global mining
imports (The Economist, 2020). Regions worst affected by COVID-19, for example,
Wuhan and Shanghai, are the places where multinational companies in mobile, car and
optical fibre manufacturing depend on for assembly line operations. Indian firms should
assess their supply chain risks before they start sourcing from the world or integrate their
supply chains with global supply chains.

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Economists, through simulation models, have predicted various scenarios of the

socioeconomic impact of virus outbreak and efforts towards containment. The first
scenario is the containment of virus spread by May end, and economy reviving very fast
in the third quarter. The second scenario is of a community spread of virus, the
containment taking longer and the economic revival not being possible until September.
In the second scenario, there would be a shortage of essential commodities, resulting in
demand shocks and inflation. A longer lockdown period for production houses will
impact supply and will wipe out the revenues for the year. The costs pertaining to
healthcare sector will also increase and relief measures will have to be intensified. The
third scenario is that of a second or the third outbreak of the virus happening during the
year and all the containment efforts going haywire. The third scenario will not be
controlled unless herd immunity develops or a vaccine is invented. Otherwise, a deep
recession in the economy will set in, unemployment rates will be very high, there will
be massive loss of life and millions of people will be pushed back to poverty.

There is a debate about ending the lockdown and the Indian workforce returning to work.
A choice between the health of the people and the health of the economy is a hard one to
make for any government. Economists argue that if the poor do not die of corona, they
will die of hunger if lockdown persists. Indian economy has a unique structure. Fifty per
cent of the Indian households still depend upon agriculture either directly or indirectly.
The people in the subsistence sector do not claim unemployment benefits because they are
not a part of social security net. During hard times, they expect the government to take
care of their food and shelter. They are ready to bounce back if basic needs are taken care
of. Government will have to make the relief measures efficient, so that the poor and the
vulnerable do not suffer. Many philanthropists have also come forward to develop a
private social security net. Labourer’s returning to farms and production houses after
lockdown will, however, depend upon many socio-economic and behavioural factors. The
labourers might be reluctant to migrate back to other states for employment. They might
decide to seek jobs in the nearby areas or depend on marginal farms. This will result in
labour shortage in the industrial sector. Industrial houses and construction sector can start
production when partial lockdown is lifted. Government and industries will have to give
confidence to the labourers by taking care of their economic and health needs to get them
back to work. Bringing back the migrated labourers to work would be a critical factor
after lockdown is lifted because if there is resistance, industries will be forced to operate
at suboptimal capacities, which will result in supply shock.

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India needs to rethink on its developmental paradigm. Equal access to Health and
Education is an important condition for equitable development. An important lesson that
the COVID-19 pandemic has taught the policymakers in India is to provide greater
impetus to sectors which make better allocation of resources and reduce income
inequalities. COVID-19 has also taught a lesson that in crisis the population returns to rely
on the farm sector. India has a large arable land, but the farm sector has its own structural
problems. However, directly or indirectly, 50 per cent of the households still depend on
the farm sector. A greater support to MSMEs, higher public expenditure on health and
education and making the labour force a formal employee in the economy are some of the
milestones that the nation has to achieve.

One of the imminent reforms to be done in the country is labour reforms. Labour laws are
outmoded in India, and some of these date back to the last century. India’s complex labour
laws have been blamed for keeping manufacturing businesses small and hindering job
creation. Industry hires labour informally because of complex laws and that is responsible
for low wages. The unemployment rate in India peaked in 2018, at 45 years high of 8.1
per cent (The Hindu, 2019). A rise in wages as a result of simplified labour laws will boost
demand and provide inducement to invest. The COVID-19 pandemic has provided an
opportunity to expedite the process of labour reforms. Financial inclusion with labour
reforms will help in increasing wages and reducing unemployment.

Before the advent of modern state, social security was largely community based in India.
The community (in villages and cities) used to take care of the old, poor and vulnerable.
Sharing food or giving food as alms was a part of daily routine and was an important part
of our culture. Many charitable works for the community were undertaken by those who
had resources within the community. At the time of crisis, the state provided help, but a
large part of help came from local philanthropists. After the creation of modern state,
community-based social security measures were discontinued. State-sponsored social
security net for all is yet to be developed in India. Social security measures are segregated.
It is time to provide a social security card (with a unique identification number) to
everyone in the country, along with a 100 per cent financial inclusion. Availability of
advanced digital technology can easily make this possible in India. Massive exodus of
migrant labourers, news of some of them dying as a result of walking miles in the
scorching sun, and many remaining hungry for days are some of the most disturbing
images of lockdown. Duplication of relief efforts in the absence of a formal social security
net and having no way to reach the last mile where a part of the population remains left

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out are some of the realities that have been brought forward by the pandemic. It is time to
create a robust state-sponsored social security net for every citizen of the country.

Implication on Capital Markets, Global Oil Market and its

Impact on India
Coronavirus fears have sent shock waves across global financial markets. Indian capital
markets are envisaging a funds flow to Western capital markets, owing to rate cuts and
fall in the stock markets the world over. As per the NSDL data, Foreign Portfolio

Investors (FPIs) have withdrawn huge amounts from India—₹247.76 billion from equity
markets and ₹140.50 billion from debt markets in a short span of 13 days, that is, from 1
to 13 of March 2020. There will be a lot of volatility in the capital markets in the next 6
months, owing to rapid flow of capital from one market to another in the world.

A historic drop in demand for oil has dropped the crude oil prices to an 18 year low of
US$22 per barrel, in March from US$65 per barrel in January. Some estimates have
pegged a saving of US$7–8 billion for India for every US$5 a barrel fall in crude oil

prices. A fall in crude oil prices may cut India’s current account deficit, which was 1.55
of GDP in 2019–2020 (Economic Survey, 2020). But the capital outflows from India may
exceed the potential saving in the current account deficit. INR to USD average exchange
rate has been ₹70.4 per US dollar, but it is already quoting near the psychological barrier
of ₹75 per US dollar. If capital outflows from India continue, rupee (INR) may depreciate
further in the coming days.

Policy and Programme Implications

Fiscal and Monetary Measures

Coronavirus pandemic demands coordinated fiscal and monetary policy measures to deal
with it. The fiscal measures include paying the healthcare bill raised by the pandemic.
Providing for masks, gloves, testing kits, personal protection equipment, ventilators, ICU
beds, quarantine wards, medicines and other equipment would mean a huge increase in
healthcare spending. Public spending on healthcare in India is 1.1 per cent of GDP. It is
likely to increase in the current fiscal year. The government has declared a relief package
of ₹1,700 billion, it will be used to make cash transfers to the poor and vulnerable
sections of the society. The sectors that are affected the most, that is, MSMEs and the
farms, will be supported by another relief package which will be announced soon.
Tourism and those sectors which are integrated with global supply chains will require
support. Tax revenues
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[Type here]
will also drop due to recession. Fiscal receipts could drop by at least 2 per cent of GDP. All these
fiscal measures will increase fiscal deficit by 1–1.5 per cent, which is currently at 3.2 per
cent, as predicted by economists.

The crisis emerging from the coronavirus spread will pull down investment and
consumption demand. Conventionally, the demand side components of GDP account for
72.1 per cent consumption, out of which government consumption is barely 11.9 per cent
as depicted in Table 2. An anxiety-induced reluctance to spend is the main threat to
economic growth rate. The government will have to increase the spending in order to
boost demand. Support to different sectors will have to be given as a measure to boost
investment demand. Repo Rate has been reduced by 75 basis points, as part of a loose
monetary policy. The federal reserve had cut its interest rate by 1 percentage point and
decided to keep it in the range of 0–0.25 per cent in the USA. Monetary policy is less
effective in dealing with a pandemic because the problem is not liquidity alone. The
disruption of economic activity and the uncertainty of future bring down the investment
sentiment. An anxiety-induced frugality among firms and investors wipes out the
investment demand.

46
Chapter 4
Objectives

47
[Type here]

48
[Type here]

Objectives
1. To focus on the impact of a pandemic on different sectors of the economy.
2. To reflect the need for policy intervention.
The following are the objectives are undertaken:
• To study the demand side impact i.e. private consumption.

• To study the short term and long term impact on different sectors.

• To study the short term and long term recommendation for different sector.

• To study the GDP of India due to COVID 19.s

The economic impact of the 2020 coronavirus pandemic in India has been largely
disruptive. India's growth in the fourth quarter of the fiscal year 2020 went down to 3.1%
according to the Ministry of Statistics. The Chief Economic Adviser 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".
The World Bank and rating agencies had initially revised India's growth for FY2021 with the
lowest figures India has seen in three decades since India's economic liberalization in the
1990s. However, after the announcement of the economic package in mid-May, India's GDP
estimates were downgraded even more to negative figures, signalling a deep recession. (The
ratings of over 30 countries have been downgraded during this period.) On 26 May, CRISIL
announced that this will perhaps be India's worst recession since independence. State Bank of
India research estimates a contraction of over 40% in the GDP in Q1 The contraction will not
be uniform, rather it will differ according to various parameters such as state and sector. On 1
September 2020, the Ministry of Statistics released the GDP figures for Q1 (April to June)
FY21, which showed a contraction of 24% as compared to the same period the year before.

The Government of India announced a variety of measures to tackle the situation, from food
security and extra funds for healthcare and for the states, to sector related incentives and tax
deadline extensions. On 26 March a number of economic relief measures for the poor were
announced totaling over ₹170,000 crore (US$24 billion). The next day the Reserve Bank of
India also announced a number of measures which would make available ₹374,000 crore
(US$52 billion) to the country's financial system. The World Bank and Asian Development
Bank approved support to India to tackle the coronavirus pandemic.[16]
The different phases of India's lockdown up to the "first unlock" on 1 June had varying
degrees of the opening of the economy. On 17 April, the RBI Governor announced more
measures to counter the economic impact of the pandemic
including ₹50,000 crore (US$7.0 billion) special finance to NABARD, SIDBI, and NHB.[17]
On 18 April, to protect Indian companies during the pandemic, the government changed
India's foreign direct investment policy. The Department of Military Affairs put on hold all
capital acquisitions for the beginning of the financial year. The Chief of Defence Staff has
announced that India should minimize costly defense imports and give a chance to domestic
production; also making sure not to "misrepresent operational requirements".[18][19] On 12 May
the Prime Minister announced an overall economic stimulus package worth ₹20 lakh crore
(US$280 billion),10% of India's GDP, with emphasis on India as a selfreliant nation. In
December 2020, a Right to Information petition revealed that less than 10% of this stimulus
had been actually disbursed.[20] During the next five days the Finance Minister announced the
49
[Type here]

details of the economic package. Two days later the Cabinet cleared a number of proposals
in the economic package including a free food grains package. By 2 July 2020, a number of
economic indicators showed signs of rebound and recovery. On 24 July the Finance
Secretary of India said the economy is showing signs of recovery at a faster rate than
anticipated, while the Economic Affairs Secretary said that he expects a vshaped recovery
for India. In July the Union Council of Ministers passed the National Educational Policy
2020 aimed at strengthening the economy. On 12 October and 12 November, the
government announced two more economic stimulus package, bringing the total economic
stimulus to ₹29.87 lakh crore (US$420 billion) — 15% of national GDP — uptil 31 October
2020.[21]

50
51
[Type here]
[Type here]

Chapter 5
Government Actions

52
53
[Type here]

Government Actions
Globally in a poll by the 'Edelman Trust Barometer', out of the 13,200+ people polled, 67%
agreed that "The government’s highest priority should be saving as many lives as possible
even if it means the economy will recover more slowly"; that is, life should come before
livelihood.[24] For India, the poll showed a ratio of 64% to 36%, where 64% of the people
agreed that saving as many lives as possible was a priority, and 36% agreed that saving jobs
and restarting the economy was the priority.[24]
In India the life versus livelihood debate also played out, with the government first
announcing that life would be prioritized over livelihood, which later changed to an equal
importance being given to life and livelihood.[25][26] By mid-May the center was keen to
resume economic activities, while the Chief Ministers had mixed reactions.[27]
Prime Minister Modi announced the first 21 days of India's lockdown on 24 March. During
this address to the nation he said, "Jaan hai toh jahaan hai" (transl. Only if there is life there
will be livelihood).[25][26] On 11 April, in a meeting with the Chief Minister's of India, the
Prime Minister said "Our mantra earlier was jaan hai toh jahaan hai but now it is jaan bhi
jahaan bhi (transl. Both, lives and livelihood matter equally)."[25][28] On 14 April, another
address to the nation was made by Modi in which he extended the lockdown, with
adjustments, to 3 May.[29] In the Prime Minister's fifth meeting with the Chief Ministers on
11 May, the Prime Minister said that Indians must prepare for the post coronavirus pandemic
world, just as the world changed after the world wars.[30][31] During the meeting Modi said
"Jan se lekar jag tak" (transl. From an individual to the whole of humanity) would be the
new principle and way of life.[30][32] On 12 May, the Prime Minister addressed the nation
saying that the coronavirus pandemic was an opportunity for India to increase self-reliance.
He proposed the Atmanirbhar Bharat Abhiyan (Self-reliant India Mission) economic
package.[33]

• Lockdown Phase 1 (25 March – 14 April)[edit]

• On 25 March the Modi government announced the world's largest food security
scheme for 800 million people across the country.[48] Cabinet
Minister Prakash Javadekar made the announcement in a press conference that the
ration would be 7 kg every month (which would include wheat at a cost of ₹2
(2.8¢ US) per kg and rice at ₹3 (4.2¢ US) per kg.)[48]
• On 25 March the Uttar Pradesh government banned the manufacture and sale of
pan masala, stating in the order that "spitting pan masala can help in spreading
Covid-19".[49] Following this, other states such as Andhra Pradesh, Rajasthan and
Gujarat also banned spitting in public places.[50][51][52]
• On 26 March the Finance Minister announced a number of economic relief
measures for the poor. hungry amidst the lockdown.[53] Pradhan Mantri Ujjwala
Yojana beneficiaries will get free cylinders for at least three months. This will
benefit over 80 million Below Poverty Line families.[53][54] The government
would expedite payment of the first installment (₹2,000) due in 2020–21 in April
itself under the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN). For the
organised sector worker, the government will pay the Employees’ Provident
Fund (EPF) contributions of both sides for 8 million employees of small
companies who earn up to ₹15,000 a month. The raise in the threshold from
₹100,000 to ₹10 million for triggering insolvency proceedings under the
Insolvency and Bankruptcy Code (IBC) was done to help MSMEs. State

34
• governments were given various instructions and guidelines such as diverting district
mineral funds for health needs relating to the pandemic.[53]

On 26 March India participated in the virtual 'Extraordinary G20 Leaders’

Summit'. The G20 nations decided to inject over $5 trillion into the global
economy to counteract the pandemic's impacts. They agreed to work together,
to strengthen the World Health Organisation, develop a vaccine and make it
available. They decided to share timely and transparent information, materials
for research and development and data. Besides expanding manufacturing
• capacity for medical supplies, they agreed to ensure smooth flows of critical
supplies. [55][56] On 27 March the Reserve Bank of India (RBI) Governor
Shaktikanta Das made a number of announcements including EMIs being put
on hold for three months and reducing Repo Rates.
Other measures introduced will make available a total ₹374,000 crore (US$52
billion) to the country's financial system.[57] Delhi government announced that
• from the 28th they will be providing free food to 400,000 every day.[58] Over
500 hunger relief centres have been set by the Delhi government.[59]
On 27 March the Rajasthan government decided to deduct the salaries of all its
officers and employees from one to five days, with the money going into the Chief
Ministers Fund. [60]
• On 28 March the Prime Minister launched a new fund called PM
CARES fund for combating coronavirus-like situations.[61] On 30
March it was announced that the UP government would transfer
• ₹611 crore (US$86 million) to 2,715,000
workers under MNREGA scheme. [62]
On 1 April the RBI announced more measures to deal with the economic fallout
of COVID-19.[63] WMA and short-term liquidity was increased to provide relief
• to state governments; exporters have also been granted some relief in the form of
relaxed repatriation limits.[63]
On 2 April the World Bank approved US$1 billion emergency financing for
India to tackle coronavirus labelled 'India COVID-19 Emergency Response and
• Health
Systems Preparedness Project'. [16][64][65]
On 3 April the central government released ₹17,287 crore (US$2.4 billion) to
different states to help combat coronavirus. The Ministry of Home
• Affairs approved ₹11,092 crore (US$1.6 billion) for states as relief under the State
Disaster Risk Management Fund.[66]
On 6 April a 30% salary cut for one year was announced for the President, Vice
President, Prime Minister, Governors, Members of Parliament and
• Ministers.[67][68] It was also decided to suspend the MPLADS for two years and
transfer the money, about ₹7,900 crore (US$1.1 billion), into the
Consolidated Fund of India.[68]
On 8 April the Department of Expenditure, Finance Ministry, allowed states net
market borrowings of ₹320,481 crore (US$45 billion) between April to
December.[69][70] ₹3,000 crore (US$420 million) of funds under the PM Garib
• Kalyan Yojana were given to over 20 million workers engaged in construction
work by the various states and UTs.[71][72] To provide relief to tax payers amid the
COVID-19 crisis, the government decided to release
18,000 crore (US$2.5 billion).[73]
• From 5 August onwards gym and yoga centres could begin opening.[136]
• On 11 August, in a video-conference between the Prime Minister and states, the
states asked for more funding to fight COVID-19. [136]
• On 23 August, the government announced economic measures to tackle effect of
COVID-19. [137]
• On 30 August, the government announced more economic measures.[137]
Unlock 4[edit]
• On 1 September new guidelines were announced by the centre as well as the
states in the graded re-opening of the economy and society.[138][139]
• On 11 September Delhi Metro resumed normal operations with pre-COVID-19
timings.[140]
Unlock 5[edit]

• In October, unlock 5 began seeing more of society and the economy open up.[141]
• In October, cinemas reopen as a part of Unlock 5 as India bends the COVID-19
pandemic curve.[142]
• On 12 October, the government announced a ₹73,000 crore (US$10 billion) worth
economic stimulus package, labelled as Atmanirbhar Bharat Abhiyan
2. 0.[21]
November[edit]

• On 12 November, the government announced a ₹2.65 lakh crore (US$37 billion)

worth economic stimulus package, labelled as Atmanirbhar Bharat Abhiyan

36
 Chapter 6
Research Methodology
37
 Research Methodology

This study used different methods, and methodology explains the process of research, design,
methods of data collection, sample selection, and ways of analysing the data. Research is an
intensive activity that is based on the work of others and generating new ideas to pursue new
questions and answers. This chapter will focus on the research methodology used, and justify
the reason as to why certain methods were chosen over the others. An in depth discussion of
research purpose, strategy, research approach, method adopted in collecting data will be
outlined in this section.

Research Process of the thesis:

• Identifying topic/research problem

• Literature review
• Designing the research
• Collecting Data
• Analysing Data
• Writing up thesis

Variables and Data Sources

The present study relies on the secondary data to make an impact assessment of COVID19
on Indian economy. The data sources are reports of National Account Statistics, a
publication of ministry of statistics and programme implementation (MOSPI); Handbook
of Statistics on Indian Economy and Monthly Bulletin, Reserve Bank of India; Export–
Import Database, Ministry of Commerce, Government of India; and annual reports
(various issues), Ministry of Micro Small and Medium Enterprises.

Method of Analysis
There are diverse methodologies of economic growth projections amid different types of
economic shocks. There has been a strong debate about the accuracy of growth projections

38
in India, wherein RBI forecast is considered most favourable (Gupta & Minai, 2019). In
the present study, the impact assessment of COVID-19 pandemic is carried-out on India’s
GVA, manufacturing sector, international trade and MSME sector. The impact is
estimated for two broad outlines: first, the situation where there is a quick turnaround after
the lockdown period and the economy experiences a vertical recovery (V-shaped).
Second, the economy experiences a U-shaped recovery where the effects of the lockdown
prolong for a longer period of time till September 2020. In the case of V-shaped recovery,
we make two hypothetical scenarios—scenarios A and B. In scenario A, we assume the
resumption of normal level of economic activities post 40 days lockdown, that is, after 3
May 2020.2 In scenario B, we consider the complete lockdown up to 3 May 2020 and 50
per cent capacity utilization of the economy till 31 May 2020. Similarly, we have two
hypothetical scenarios—C and D—in case of U-shaped recovery. In case of scenario C,
we assume 70 per cent of capacity utilization by 30 June 2020 in addition to 50 per cent
capacity utilization from 3 to 31 May 2020. Scenario D where normalcy level is assumed
in three phases—50 per cent by end of May, 70 per cent by June and 90 per cent by
September 2020, assuming that 10 per cent sectors which are adversely affected may take
much time for their resumption. These numbers of capacity utilization are based on partial
opening of the economy across sectors and locations, and the opinions of subject experts.
Further, keeping in view the substantial channelization of resources for public
administration and health services, the results for four hypothetical scenarios are present
with respect to (a) with the over capacity utilization of 50 per cent in the public
administration services, hereafter PAD and (b) the normal functioning of PAD services.

Gross Value Added

In order to see the impact on economic growth we take the real GVA based on 2011–2012
prices. This data is available till Q3 of financial year (FY) 2019–2020 at aggregate level
as well as for broader categories, viz. agriculture; mining and quarrying; manufacturing;
electricity, gas, water supply and other utilities; construction; trade, hotels, transport,
communication and services related to broadcasting; financial, real estate and professional
services and public administration; and defense and other services. First we take the data

39
 quarter-wise for calendar year 2019 (from January to December). We compute the
quarterly growth rate (year on year [YoY]) for each sector as well as aggregate GVA for

calendar years 2018 and 2019. By taking the average of past 2 years’ quarterly growth
(YoY) for each sector, we estimate the quarter-wise GVA for each sector as well as
aggregate GVA for the year 2020 with Q1 ending in March and Q4 ending in December
2020. From the estimated values of 2020, we spare three sectors completely from the
computation of loss of lockdown amid COVID-19 (Table 1). Rather we assume the 50 per
cent overutilization of the health and membership organizations (part of other services) and
public administration services.

After excluding the contribution of these above sub-sectors, we compute the loss for each
sector under four hypothetical scenarios. After computing the loss for each quarter for
every sector, we add-on the total loss of the corresponding sector and further adds up
across sectors to find the total estimated loss in GVA. Here we utilize following criterions
of presentation to find the impact assessment.

RESEARCH DESIGN:

Kerlinger (1986) definition: “Research design is the plan and structure of investigation so
conceived as to obtain answer to research question. The plan is the overall scheme or program
of the research. It includes an outline of what the investigator will do from writing hypotheses
and their operational implications to the final analysis of data. A structure is the framework,
organization, or configuration of the relations among variable of a study. A research design
expresses both the structure of the research problem and plan investigation used to obtain
empirical on relations of the problem”
In this our marketing research, we have used descriptive design. In this design we have used
cross sectional design. It involves the collection of information from any given samples of
population elements only once. Cross sectional design are further divided in two type's single
cross sectional and multiple cross sectional. We have used multiple cross sectional design.

64
 SOURCES OF DATA:

 PRIMARY DATA:

We collect primary data during the course of doing experiments in an experimental research but
in case we do research of the descriptive type and perform survey whether sample survey of
census survey. Then we obtain primary data either through a direct communication with
respondent or questionnaire.

We have obtained data through questionnaire

 SECONDARY DATA:
• Website

• Journals

• Magazines

• Articles

• Books

• Project report

We have obtained secondary data via website, journal, Articles and Project reports through.

DATA COLLECTION METHOD:

Questionnaire

SAMPLING METHOD:

Sampling is a technique that provides a range of methods that enable a researcher to reduce the
amount of data they need to collect by considering only data from a subgroup rather than
41
all possible cases or elements. This technique saves time and it also gives a higher overall
accuracy than census because collecting data from fewer cases means one can collect
information that is more detailed. A researcher faces a basic choice question whether to
choose a non -probability or probability sampling and each method has its own procedure and
design.

Non-probability: Convenience Sampling Method

In non -probability sampling technique the chances of selection of all elements of population
are not equal and convenience sampling method means sample drawn at the convenience of
the interviewer people tend to makes the selection at familiar location and choose re spondents
who are like themselves.

66
 Chapter 7

Analysis & Interpretation

Of Results

67
ANALYSIS & INTERPRETATION OF RESULTS

This chapter covers research findings and connects the theoretical framework to the empirical part
of the research. The first section of the chapter gives a brief introduction about the case company,
Ironic and its core business. While the second part discusses Impact of covid-19 in Indian
economy and Global economy and what action taken by Government.

Data interpretation refers to the implementation of processes through which data is reviewed for
the purpose of arriving at an informed conclusion. The interpretation of data assigns a meaning to
the information analysed and determines its signification and implications.

The importance of data interpretation is evident and this is why it needs to be done properly. Data
is very likely to arrive from multiple sources and has a tendency to enter the analysis process with
haphazard ordering. Data analysis tends to be extremely subjective. That is to say, the nature and
goal of interpretation will vary from Economy sector to Sector, likely correlating to the type of
data being analysed. While there are several different types of processes that are implemented
based on individual data nature, the two broadest and most common categories are “quantitative
analysis” and “qualitative analysis”.

Yet, before any serious data interpretation inquiry can begin, it should be understood that visual
presentations of data findings are irrelevant unless a sound decision is made regarding scales of
measurement. Before any serious data analysis can begin, the scale of measurement must be decided
for the data as this will have a long-term impact on data interpretation ROI. The varying scales
include:

Nominal Scale: non-numeric categories that cannot be ranked or compared quantitatively.

68
Variables are exclusive and exhaustive.
Ordinal Scale: exclusive categories that are exclusive and exhaustive but with a logical

order. Quality ratings and agreement ratings are examples of ordinal scales (i.e., good,
very good, fair, etc., OR agree, strongly agree, disagree, etc.).

Interval: a measurement scale where data is grouped into categories with orderly and
equal distances between the categories. There is always an arbitrary zero point.

Ratio: contains features of all three.

For a more in-depth review of scales of measurement, read our article on data analysis questions.
Once scales of measurement have been selected, it is time to select which of the two broad
interpretation processes will best suit your data needs. Let’s take a closer look at those specific
data interpretation methods and possible data interpretation problems.

69
70
The analysis of the questionnaire are as follows :-

71
72
73
74
75
76
77
Chapter 8

Findings

78
79
Findings
The findings of the empirical framework coincided with the theoretical framework based on the
research problems. The study shows how Economy, study and income impacted due to covid19.
In fact it is foreseen that in the near future there will be a shift in economy from traditional to
digital economy platforms. The study also identified some challenges faced by Indian economy
in the time of covid19 but the budget of 2021 says that India grow in this year very fast, unlike
in the study where there have been so many challenges reported.

5.1 Research Limitation

This research was conducted using a cross sectional data from a small case company and
therefore did not provide enough longitudinal data (Longitudinal data are data sources that are
collected over a period of time through repeated contacts with the same respondents) to arrive
at conclusive solution. The research should have also been conducted as a triangulation study
i.e. qualitative and quantitative research. This would have provided data from both the
Newspaper, Articles, international sites and Government data view but because of limited
resources the study was conducted as a single case study to serve a purpose.

80
81
Conclusion

82
83
Conclusion

Our assessment is that Indian economy may have 0.4 per cent growth this calendar year
2020 in most realistic scenario and a negative growth of around 3 per cent in worst case
scenario with 50 per cent over utilization of public sector and defense services (PAD).
However, in case of more pessimistic environment where there are normal PAD services
(no over utilization of PAD), the deceleration would be in the range of 1.3 per cent in best
case scenario to 7.2 per cent under worst case scenario. The most affected sector is going
to be mining sector followed by manufacturing, construction, trade, hotels and transport
services and financial services. The manufacturing sector may shrink in the range of 5.5–
20 per cent from best case to worst case scenario, respectively. In manufacturing, some of
the most affected industries are likely to be metals and chemical products, motor vehicles,
machinery and equipment, textiles, etc. The loss in industrial NVA (all industries) as
percentage of the base NVA is estimated at 13.5–27.8 per cent for base case scenario and
worst case scenario, respectively. Interestingly the top 10 industries which contribute
around two-thirds of the total industrial NVA, bear the loss in NVA in the range of 11.1–
19.6 per cent of the total NVA of base year. Top 10 industries contribute 65 per cent of
total industrial sector NVA, absorb 55 per cent of all industrial workers (55%) and bear
significant fixed cost, around 70 per cent of total interest and rent cost of all industries. The
largest decline is expected for basic metals and electric equipment (around 21% for each),
followed by textiles (18%); coke and refined petroleum products and motor vehicles
(around 15%, each); rubber and plastic products and other non-metallic products (around
11% each).

of COVID-19 on India’s trade is going to be huge. The estimated fall in India’s exports is
going to be 13.7–20.8 per cent in 2020 over 2019 under impact scenarios A–D. The
estimated fall in imports ranges from 17.3 to 25 per cent. Under scenario The A, the
exports and imports are expected to decline by 37 per cent and 35 per cent, respectively, in
second quarter of 2020, the period in which there is very restrictive or no movements of
goods and services due to complete lockdown. This fall may extend to around 60 per cent
for both exports and imports if the economy experiences partial lockdown till the mid of
2020 and assuming 90 per cent capacity utilization till September 2020. With regard to
percentage decline in exports and imports across commodities due to COVID-19, it is

84
85
estimated that products such as petroleum products, chemical products, machinery,
electronics and plastic and rubber would suffer a loss of more than the national average of
20 per cent. As per estimation, India’s MSME sector can expect a decline of 2.1 per cent
under base scenario and this loss can increase to 5.7 per cent in case of worst case
scenario. The loss is more skewed in manufacturing sector to the tune of 3.5 per cent in
scenario A and 8.3 per cent in the scenario D. The MSMEs dealing in trade and other
services activities can bear the decline in GVA in the range of 1.4–4.5 per cent. It is
evident from the analysis that the impact of the pandemic across sectors and in different
scenarios of complete, extended and partial lockdown and at different levels of capacity
utilization is massive on the Indian economy. The impact is particularly severe on trade,
manufacturing and the MSME sector which contribute substantially to India’s
employment and growth.

The stimulus measures so far are around 10 per cent of GDP which is a welcome step
when the economy has come to a standstill. Given the estimated fall out of COVID-19 on
Indian economy, the government should not worry about the fiscal rule and go all out in
adopting counter cyclical fiscal measures to stop things from going bad to worse. It is time
for big initiatives to help firms which not only depend on the domestic economy but also
on international trade. Government also needs to ensure that the stimulus measures are well
directed at some of the worst affected sectors like manufacturing, construction, travel,
transportation, tourism, hotel, etc. Firms in worst affected sectors are suffering due to shut
down of factories, collapse of global demand, cancellations of orders, delays in shipments,
etc. Therefore, these firms need support in the form of interest free working capital to
cover their wage cost and fixed cost (rent and interest) to survive during these tough times.
The economic package has given credit guarantee but it’s time now to boost demand so
that there is credit uptake. MSME sector is labour intensive and life line of India’s
manufacturing and trade, and the sector is badly affected by the disruptions to both supply
And demand mainly due to domestic and international lockdowns. Apart from credit and
other financial incentives, the need of the hour is to help firms, business and economic
activity to get back on operational mode. The economic impact of COVID-19 pandemic is
huge and it would need a humongous effort on the part of the government, industry, civil
society and all key stakeholders to ensure that the Indian economy recovers sufficiently
and soon. The study has further scope to carry out the impact assessment of Indian
economy at more disaggregate level.

86
Bibliography

87
Bibliography
• Literature review on the business are available in site
https://journals.sagepub.com/doi/abs/10.1177/0972150920945687

• Government actions taken by phase to phase

https://en.wikipedia.org/wiki/Indian_government_response_to_the_COVID-

19_pandemic#:~:text=On%2024%20March%2C%20Modi%20announced,and%20
for%20training%20medical%20workers.

• https://www.hindustantimes.com/india-news/20-days-20-steps-alookatgovernment- s-
measures-against-covid-
19amidlockdown/storyaUNOgQ9Om2dxQt9WAyEaGI.html
• Impact in all over world economy taken through https://imf.org/ and
https://www.worldbank.org/

57