Introduction:
In November 2019 in Wuhan, China, an outbreak of the deadly virus has taken place which suddenly attacks the respiratory system of human beings and further leads to death. This deadly virus is spread due to the mammal of the order Chiroptera, bats. Initially, this spread of the virus was neglected and the Chinese government did nothing in regards to it but later when it started spreading worldwide then guidelines had been passed to stop its spread further and how to protect those who are not infected yet. Further this virus started spreading at a huge scale all over the world and an unavoidable hurdle has emerged in front of every country. This deadly virus has some symptoms like fever, dry cough, tiredness, difficulty in breathing or shortness of breath, chest pain or pressure, etc. After this spread of the deadly virus, most of the countries declared lockdown in their respective territories for the sake of stopping the spread of this virus.
Discussion
This global pandemic which started and detected in China, till now has infected people in 188 countries. This sudden lockdown due to virus stops and severely affected everyone’s life at every level. Every country’s internal and external development is affected at large. Due to continuous confinement at home people started to get affected mentally as well. But on the larger platform, the aspect which has been affected the most is the economy. The economy is deteriorating not only at an individual level for a single country but on the world level too.
The COVID-19 Pandemic is Far More than a Health Crisis
It is affecting societies and economies at their core. While the impact of the pandemic will vary from country to country, it will most likely increase poverty and inequalities on a global scale. In India, Covid-19 pandemic induced market instability and lockdown. Up to 53% of businesses have specified a certain amount of impact of shutdowns caused due to COVID-19 as per the FICCI[1] survey in March. By the 24th of April, the unemployment rate had increased nearly 19%[1] within a month, reaching 26% unemployment across India, according to the Centre for Monitoring Indian Economy. Approximately 14 crores of citizens lost their jobs. The government of revenue has been severely affected as the deposit of tax is decreased as compared to the previous year. India and other countries have several small scale industry small turnovers but a great contribution to their respective economies, they basically have interactions with their customers directly and this is also the fact that their business flourishes due to this direct interaction only and in this small framework. This pandemic has inevitably affected these small scale industries. Union Minister Nitin Gadkari said that some states do not have even that much money that they could pay salaries shortly. In April, former Reserve Bank of India Chief Raghuram Rajan said that the coronavirus pandemic in India may just be the “greatest emergency since independence”.
The lockdown all over the countries has confined millions of citizens which directly means shutting down of business and no economic activities. In the US, COVID-19 has led to millions of people who struggle with unemployment. In April alone the figures were at 20.5 million, and are expected to rise as the impact of the pandemic on the US labour market worsens. As per a Reuters report, since March 21, more than 36 million have filed for unemployment benefits, which is almost a quarter of the working-age population. The International Monetary Fund has projected a deeper 4.5% contraction for India in the financial year 2021 than earlier estimated citing a longer lockdown period and slower than anticipated recovery.
If we discuss the impact of this pandemic especially on Indian economy then followings are the outcome:
1. A Sharp Rise in Unemployment.
The coronavirus (COVID-19) crisis has led to a spike in the country’s unemployment rate to 27.11% for the week ended May 3, up from the fewer than 7% level before the start of the pandemic in mid-March, the Centre for Monitoring Indian Economy (CMIE) has said. In India, unemployment is an issue in general but in this pandemic period, it is increased to an extreme extent. Those who were daily wagers, labourers, etc. who used to earn daily for their daily livelihood, have no jobs right now. In this pandemic, no recruitment can take place neither in the public sector nor in the private sector. Numbers of graduates and educated are sitting idle as a consequence of this.
2. Stress on Supply Chains.
This pandemic has affected the supply chain i.e. manufacturing, procurement, and distribution. There is wholly or partial lockdown in several parts of the country and because of that factory, industries, various firms, etc. are closed, and directly it impacts the manufacturing activities. At present manufacturing is either very low or zero, so there is no procurement in the market to the wholesalers and retailers and further, there is no distribution to the ultimate consumers. The overall whole supply chain is obstructed due to this COVID-19 pandemic.
3. The Decrease in Government Income.
This pandemic has severely affected government revenues. India faces a sharp decline in government revenues and economic growth for at least two quarters as the coronavirus hits economic activity and a fall in investor sentiment impacts privatization plans, government and industry sources said. Officers in the tax department said that there is a fall in receipt of consumer demand as reflected in the lower sales of autos, passenger traffic, hotel bookings, and retail sales.
4. The Collapse of the Tourism Industry.
In the normal course of life, India attracts nearly 1 million foreign tourists. India annually earns nearly 30 billion from foreign tourist arrivals and the industry is worried that a global spread of the virus will harm already weakened economic growth. Tourism does not only help in raising revenue of the government but also renders a number of other opportunities including employment, etc.
5. The Collapse of the Hospitality Industry.
The hospitality industry, which is one of the biggest employers in the service sector, has taken a body blow following the COVID-19 lockdown. As the lockdown moves into the third month, the hospitality industry stares at a bleak future with no clear roadmap to reopening of restaurants. Social distancing or physical distancing should be practiced to stop its spread so it is impossible to gather in hotels and restaurants.
6. Reduced Consumer Activity.
Equally, the economic consequences of the coronavirus pandemic have meant consumers are less inclined to spend more, with many expecting their household income to continue to fall in the coming months. The COVID-19 outbreak has slowed the pace and changed daily life for many consumers, and this is having a profound impact on the way we view personal hygiene, health, and how we engage with our communities, friends, and families.
7. Plunge in Fuel Consumption, Rise in LPG Sales.
With a further increase in lockdown and Covid-19 cases, the country’s fuel consumption continued to witness a downward trend in consumption. Notably, jet fuels were the worst hit. However, LPG cylinder demand continued to record growth. The LPG consumption recorded double-digit growth by 12.2% to 2.13 million tonnes in April 2020. LPG is the only fuel currently which has witnessed a rise in demand.
8. Fall in Trade with China.
The trade between China and India fell 12.4 per cent year-on-year to USD 12 billion in the first two months amid the coronavirus outbreak, according to the latest data from Chinese customs. The coronavirus outbreak is slowing down Indian exports to China, Atul Dalakoti, executive director for China at the Federation of Indian Chambers of Commerce and Industry (FICCI) said. China in recent years has emerged as a major market for Indian products like seafood, petrochemicals, gems, and jewellery, he said. The Covid-19 outbreak has adversely impacted exports of these items to China, Dalakoti told.
Conclusion
In the end, if we sum up we can say that these kinds of a pandemic due to so communicable virus can negatively affect the economic activities and have enough power to turn it upside down; it does not matter whether the country is developed or developing. Economies of the developed country have pressure to make it consistent and economies of developing countries have pressure on themselves to the mark of the developed country. The point which is of importance is that either this pandemic has a lasting structural impact on the global economy or largely short-term financial and economic consequences, in both the situations these kinds of communicable diseases are potent enough to eradicate global economic stability. Because of high transportation connectivity, globalization, and economic interconnectedness, it has been extremely difficult and costly to contain the virus and mitigate the importation risks once the disease started to spread in multiple locations. This entire situation alerts us to discover some stable and collective international solutions to tackle these kinds of crisis in upcoming future years. As outbreaks of novel infections are not likely to disappear shortly, proactive international actions are required not only to save lives but also to protect economic prosperity.
References:
[1] http://www.ficci.in/ficci-in-news-page.asp?nid=21687
[1] https://www.timesnownews.com/business-economy/economy/article/how-the-covid-19-outbreak-has-affected-the-joblessness-rate-in-india-explained-in-4-charts/634284
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