IMPACT OF COVID-19 ON INDIAN ECONOMY

BY- KASTURI ASHTIKAR

INTRODUCTION

 Covid-19 , also known as Coronavirus, started hitting India in March 2020

 It is a contagious disease which was first identified in Wuhan, China.
 To stop its spread every country had to go under lockdown.
 Likewise India also started lockdown and it impacted largely on economy, agriculture and almost each and every
sector.
 The economic impact of COVID-19 pandemic in India has been largely disruptive.
 India’s growth in fourth quarter of the fiscal year 2020 went down to 3.1% according to Ministry of Statistics.
IMPACT ON DIFFERENT SECTORS

 Sharp rise in unemployment

 Decrease in government income
 Collapse of tourism industry
 Collapse of hospitality industry
 Rise in pharmaceuticals sales
 Real estate & construction sector
SHARP RISE IN UNEMPLOYMENT

 Unemployment rate refers to the percentage of unemployed persons in labour force.

 Unemployment rate in urban areas rose to 20.9% during April-June quarter of 2020, more than double the
unemployment rate in same quarter the previous year (8.9%). By the end of December 2021 , the unemployment
rate in India was recorded at nearly 8%.
 While the unemployment rate had significantly declined over the course of 2021 since having peaked in April
2020, the breakout of new coronavirus variants coupled with recurring lockdowns resulted in a fluctuating trend of
unemployment gripping the nation.
DECREASE IN GOVERNMENT INCOME

 The central government and most of the state governments passed their budget for the financial year 2020-21
during February-March 2020, before the lockdown. The central government estimated a 10% growth in the
country’s nominal GDP in 2020-21, and more than half of the states estimate their nominal GSDP growth rate in
the range of 8%-13%.
 Due to the unforeseen impact of the lockdown on the economy, the 2020-21 GDP growth rates are expected to be
lower than these estimates. As a result, the tax revenue that the central and state governments will be able to
generate are expected to be much lower than the budgeted estimates, during the period of lockdown.
.

Revenue in 2020-2021
Total revenue of Central
9%
Government in 2020-2021 is
Rs.22,45,893 crore. 10%

7%

17%
73%

Net tax revenue Non tax revenue Dividends and profit Capital receipts Disinvestments
 COLLAPSE OF TOURISM INDUSTRY

 The COVID-19 pandemic has impacted the tourism industry due to the resulting travel restrictions as well as
slump in demand among travelers. The tourism industry has been massively affected by the spread of coronavirus,
as many countries have introduced travel restrictions in an attempt to contain its spread.
 The foreign tourist arrivals in 2019 were of the order of 10.89 million with a 3.2% growth over the corresponding
numbers for the previous year.
 Domestic tourism was a key segment contributing to the overall industry and there were an estimated 1,854.93
million domestic tourist visits all over the country.
 The impact of the tourism sector as an economic powerhouse as well as its potential as a tool for economic
development cannot be ignored.
COLLAPSE OF HOSPITALITY INDUSTRY

 Hospitality is one of the industry workers most impacted by the COVID-19 pandemic. Not only have many people
in the industry lost their jobs, but they have also witnessed significant changes in the way jobs should develop.
 Tourism along with the hospitality sector contributes direct and indirect employment to many people, propels
consumption of many items and gives a boost to allied sectors such as food and beverage, transportation,
accommodation, various leisure and recreation activities, etc.
RISE IN PHARMACEUTICAL SALES

 The Indian pharma industry has shown a double digit growth of around 15% led by growth of Covid-19 products
in the last one year as against a single digit growth of 3% shown last year.
 Domestic market has done well for Indian Pharma companies as against the export market. Strong domestic
demand led by price hikes contributed to high double digit growth this year.
 New product launches and Covid-19 drugs also contributed to this demand this year.
 Pharma growth however may slow down next year as demand for Anti-virals drugs have seen significant decline
and there would be normalization of growth in anti-biotics and nutritional supplements.
REAL ESTATE AND CONSTRUCTION SECTOR

 The impact of Coronavirus on the Indian real estate sector was stifling to the point that it brought property
transactions to a near-halt when the nation went into a complete lockdown during both waves.
 Since then, the market has taken several strides towards recovery, and just when it seemed the revival was not far,
the country was struck by another variant of the virus, Omicron.
 Not only the real estate sector but the allied industries dependent on the construction sector also inflicted heavy
losses during the year 2020.
 On average, 250 small and medium-sized businesses, such as aluminum panels, steel bars, construction machinery
parts, and many others, are directly related to the real estate industry. All of these industries reported losses in
2020 along with an increase in costs, further hampering sales.
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