Covid-19 and its Economic Impact in India

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Covid-19 and its Economic Impact in India 


Covid-19 continues to spread rapidly around the world. Although a global pandemic, the impact of Covid-19 is not same for every country. According to the data released by the Indian Union Health Ministry as on 10 May 2020, a total of 67,152 positive cases of coronavirus have been reported in India. So far, 2,206 patients have succumbed to the virus in the country.

The spread of Covid-19 may require the imposition of tougher and longer-lasting containment measures-actions which will cause an extra tightening of Indian financial conditions . Moreover, if the lockdown further continues it can expose the vulnerabilities within the financial sector leading to exacerbation of pandemic shock.

As firms become distressed and default rates climb higher, credit markets may come to a sudden stop, especially in risky segments like high yield, leveraged loan, and personal debt markets. Impact of Covid-19 on Indian businesses, over the coming month's jobs are at high risk because firms are trying to find some reduction in manpower. Further, Covid-19 crisis has caused an unprecedented collapse in economic activities over the previous couple of weeks and most businesses sectors struggle with "tremendous uncertainty" about their future. 

Covid-19 has already resulted in closure of the businesses organisations and retail establishments due to restriction of movement of people. In fact, there are numerous small scale industries that tend to be most vulnerable due to this pandemic, where the Covid-19 has impacted both demand and supply. Therefore, present situation could result in inflation and economic crises.

In order to prevent the unfold of Covid-19 outbreaks, India have been put under strict lock down, people are not moving out of their home, bringing a total halt to major industrial production chain. Buying power of the people is turn down, so demand for the product is reducing. Moreover, long periods of lockdown in movement, limited portability of products, and retail business shutdowns may impact India's key areas.
Negatively impacted Sectors : 

Apparel and Textile will be negatively impacted due to lack of labour supply, raw material unavailability, budget constraints and reduced demand due to restricted movement of customers and their poor buying capacity.

Auto sector (which includes automobiles and auto parts) will face challenges on account of lack of demand, global recession and falling income levels.

Aviation and Tourism is the one sector which has the very best probability of foundering without direct government intervention.

Export and Shipping businesses will find this era very challenging.

Construction and Engineering businesses are generally leveraged and hence will counter the major challenges of high-interest payments, lack of labour supply, raw material unavailability, and diminished sales.

Sectors with a positive trends: 

Online Education firms involved in online-skill development.

Digital Data : There will be a sudden spike in demand for digital data and digital content.

Retail Chains and FMCG can flourish, if they opt for online purchase and delivery.

Chemical Industry: Firms dealing in Chemicals can gain due to upward demand for disinfectants, drugs and medicines.

Pharmaceutical firms are set to ascertain growth within the near term.


Industrial production level globally is slowed down or held back. The effect within the India remains unpredictable, but expecting a hard hit to the economy and the timing of the next recovery remains uncertain. The volatile conditions create a chance to guard against downside risk and increasing income. Covid-19 will still affect the markets, however, we should all collectively remain vigilant as we navigate through this era of uncertainty together.

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