“Coronavirus Outbreak” Covid-19 impact on the Indian Economy

Covid-19 impact on the Indian Economy
Dashmeet Kaur
| Updated: Apr 06, 2020 | Category: Covid-19

Coronavirus pandemic has turned out to be the most dreadful infectious disease. The numbers of COVID-19 cases are increasing at a rapid pace, with over 1,123,024 infected globally and 2,902 cases in India. It is not only a threat to the human race but also an alarming menace to the economy. The virus that initially surfaced in Wuhan has now become a dooming reality of India. Currently, India is in the middle of a 21 days lockdown, which began on 25th March, to circumscribe the outspread of Coronavirus. An upshot of the move will spill over to the Financial Year of 2021. This write-up will unfold a true picture of the Covid-19 impact on the Indian Economy.

An outlook of the whole scenario

India’s economy was already growing at a six-year low rate of 4.7 % in the third quarter of the current fiscal year. There was an earnest hope of its restoration in the fourth quarter; however, the novel Coronavirus epidemic has flipped the situation upside-down with no scope for betterment anytime sooner. It will majorly hit the demand-supply ratio and create supply-side problems.

For an economy like India that so far was lurching under rising unemployment, demand depression, and shortage of industrial outputs, Coronvirus seems to be nothing but a nightmare. The supply-side constraint will deliver a heavy blow, threatening the growth prospects of the social & economic well being of several people.

Due to the current lockdown, both the production & distribution of non-essentials items has come to a halt. This strikes at least 55% of the Indian economy for three weeks, which is about INR 2 Lakh Crore.

COVID-19 impact on Demand and Supply

Coronavirus outbreak is even more hazardous for a populous country that has a shortage of medical equipment and lacks in healthcare facilities. Therefore, the Government of India is diligently handling this epidemic and trying to curb its impact through the lockdown. However, the action is futile in restraining Coronavirus impact on the Indian economy.

Impact on Demand

Let’s look at the ways in which COVID-19 is affecting demand-supply in India:

  • According to a recent survey of FICCI, hospitality, aviation and tourism are amongst the most damaged sectors that are facing maximum loss due to the present pandemic.
  • Shutting down of malls, cinema theaters and stadiums have a vital impact on the retail sector by knowing the consumption of essential and discretionary goods.
  • The consumption of goods and services is also afflicted because of the decline in income levels and the increasing rate of job losses. COVID-19 is mainly a curse for daily wage earners who belong to the sectors of entertainment, retailing, construction, and others.
  • The increasing fear of Coronavirus among people has lead to a drastic drop in purchasing decisions. Moreover, the travel restraints imposed by the Central Government to prevent the further spread of COVID-19 in India have badly impacted the transportation sector.

Impact on Supply

  • The closedown of large scale factories is delaying the supply of goods from China, thereby, affecting many Indian manufacturers. As per the report of FICCI, industries of pharmaceuticals, electronics, chemical products, automobiles, are facing an inevitable shortage of raw material and other components.
  • The report added, besides having an adverse impact on the imports of essential raw materials, the slowdown of manufacturing activities in the international markets of China, Europe and the US is also impacting exports of India to these countries. The Coronavirus outbreak has also pulled down the economic growth projections of India.

A ray of hope for Rural Sector

The GDP growth in India is at a decadal low and any further depletion in the economy shall bring more sufferings specifically to the workers. Considering the harmful impact of Coronavirus on the Indian economy, the Finance Minister, Nirmala Sitharaman [2] has announced INR 1.76 Lakh Crore as relief fund on 26th March. The decision was taken to mitigate the disruption.

It will largely foster and support the unorganized sector of India, specifically daily wage workers and rural poor. The relief will include supply of Public Distribution System and cash transfers. Such unconventional measures aim at ensuring credit availability to stabilize the situation.

Followed by Finance Minister’s decision, the Chief Minister of Delhi Arvind Kejriwal[1] gave assurance to the petty traders, shopkeepers and street vendors. He assured to provide online business operations to avoid any persecution at the hands of cops.


Considering the struggle and challenges which the corporate realm is facing presently, the Indian economy is most likely to experience a decline in the growth during the last quarter of the current Financial Year. As per a report, it is been said that if the Coronavirus pandemic continues, then the economic growth of India may remain subdued in the first quarter of Fiscal Year 20-21 as well. The Moody Credit Rating Agency has also revised down India’s growth forecast from 5.4% anticipated in February to 5.3% in 2020.

This outbreak will affect all the industries of India, including shipping, textiles, solar panels, pharmaceutical, IT, tourism & Aviation up to a large extent that will go to the extent of 10%. Moreover, the Indian importer’s dependence on Chill will further slow down the progress. On the brighter side, India could also be the beneficiary of positive flows, as it appears to be the least-impacted market.

Stay tuned with Swarit Advisors to know about the latest policies and schemes of Government to reduce the Covid-19 impact on the Indian Economy.

Read, Also:Latest announcements by Finance Minister during Lockdown


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