Covid 19 Presentation and it's impact on India

Impact of Covid-19 In
India
Presented By :
1. Vishnu Prasad Bisoyi (202110252)
2. Soumya Sambit Mishra (202110248)
3. Omm Prasad Rath (202110249)
4. Subhranshu Shekhar Sahu (202110251)
5. Manas Ranjan Das (202112253)
6. Subhashree Samal (202111255)

Updated:August 25, 2020
What Is Covid-19?
• COVID-19, caused by the novel coronavirus
SARS-CoV-2, is a highly contagious respiratory
illness.
• It originated in Wuhan, China, in late 2019,
quickly escalating into a global pandemic.
Symptoms range from mild to severe,
including fever, cough, and difficulty
breathing.
• Prevention measures include vaccination,
mask-wearing, social distancing, and hand
hygiene.

Preview of Results
1

Lockdown Imposes Heavy Economic Costs
• India’s GDP is estimated to have
fallen by 30% during the country’s
9-week lockdown
(compared to a no-COVID scenario)
• Food system is adversely affected
by falling consumer & export
demand
(agri-food GDP falls by 5%, despite exemptions
to the agriculture sector)
• National poverty rate increases by
22%-points during the lockdown
(295 million more people temporarily living
below the national poverty line)
Economic impacts during 9-week
lockdown period
(changes are relative to a no-COVID scenario)
30.3
21.9
135.1
295.5
Percentage decline
in national GDP
Percentage decline
in agri-food system 5.0
GDP
Percentage point
increase in national
poverty rate
Decline in national
GDP in US$ billions
Increase in number
of poor people in
millions
Source: India SAM Multiplier Results

Costs Likely to Persist Throughout 2020
• Economy is gradually reopening
& many restrictions are easing
• But economic losses remain,
even with a faster easing
(GDP may be 9-13% lower in 2020
compared to a no-COVID scenario)
• Average GDP & poverty rates
for 2020 hide sharp mid-year
deteriorations
(many people & businesses may require
government support to cope & recover)
Change in
quarterly
GDP
Change in
national
poverty rate
(National
poverty line)
Quarterly national impacts under faster
or slower recovery scenarios
-26%
-6%
-30%
-16%
-1%
-5%
Q1 Q2 Q3 Q4
-2% -2%
Faster recovery Slower recovery
4%
1%
1% 1%
21%
19%
10%
3%
Q1 Q2 Q3 Q4

COVID-19 Outbreak & Lockdown
Policies in India
2

Sectors Affected by Lockdown Policies (1)
Sector Lockdown restrictions or exemptions in targeted regions Directly Affected?
Agriculture
• Farming activities exempted (essential sector)
• Movement restrictions occurred just after planting for winter crops
• Limited extension visits to farms, suspended development projects
Minimal
Mining & crude oil • Extraction operations shut down Minimal
Manufacturing
• Food processing & medicines exempted (essential sectors)
• Movement restrictions affected many operations
• Nonfood producing companies closed
High
Utilities • Electricity & water distribution exempted (essential sector) Minimal
Construction • Construction projects/sites closed, including most public works High
Wholesale & retail
trade services
• Retailers of essential goods exempted, with limited trading times
• Social distancing restrictions affected market activity
High
Transportation,
storage & cargo
• Air travel closed; cargo/freight transport exempted (essential sector)
• Inter-district passenger transit closed
• Urban passenger transit reduced
High
Hotels & food
services
• Hotels, restaurant, cafés, bars closed apart from take-away foods
• Limited delivery options for food or other products
High

Sectors Affected by Lockdown Policies (2)
Banking, finance &
insurance
• Banks operating through digital platforms
• Other financial institutions closed or teleworking (e.g., insurance) Minimal
Professional &
business services
• Almost all closed or teleworking (e.g., legal, accounting services)
• Activities involving in-person field visits affected (e.g., engineering)
Minimal
Public admin &
law enforcement
• Public services & agencies remain open, but most staff teleworking
• Police & security services exempted (essential)
Minimal
Education services
• All public schools closed without much scope for online delivery
• All private schools closed with some online materials Some
Health services
• Health services exempted (essential)
• Elective operations reduced but rising number of COVID patients
Minimal
Sports &
entertainment
• Sports & outdoor entertainment banned
• Some activities operating (e.g., newspapers, radio & TV) High
Other services
• In-person religious gatherings banned
• Informal repair firms limited due to movement restrictions High

Global & Other Nationwide Shocks
Export demand
• Reduced international tourism & business travel
• Lower export demand for mineral exports
• Lower export demand for agricultural, other products
High
Remittances • Decline in value of remittances sent by nationals working abroad Some
Government
revenues
Nationwide
• Fall in tax revenues due to decline in economic activity
Some
See detailed sector-level assumptions about production &
demand shocks in Annex at the end of slide deck

Measuring Economic Impacts
3

Economywide Multiplier Analysis
• Lockdown policies & shocks have direct impacts on the operation
of certain sectors
e.g., closing businesses, restricting travel, etc.
• But they also generate indirect impacts on other sectors involved
in supply chains
i.e., input suppliers & downstream users
• Multiplier analysis uses sector input-output data to measure
direct & indirect impacts throughout & across supply chains
Includes impacts on GDP, jobs & household incomes
• India model based on 2017/2018 social accounting matrix (SAM)
& Household Consumption Survey 2011-12 (68th round)
(results scaled to 2019 GDP & employment levels)

Economywide
Impacts
GDP | jobs
Incomes | poverty
Direct
impacts
Framework for Analyzing COVID-19
GlobalImpact Channels
(Due to partial or full lockdowns in other countries)
Indirect
impacts
DomesticImpact Channels
(Due to partial or full lockdowns in own country)
• Export demand
• Remittances & migration
• Foreigndirect investments
• Agriculture
• Mining & crude oil
• Manufacturing
• Utilities (energy, water)
• Construction
• Whole & retail trade services
• Transportation,storage & cargo
• Hotels & food services
• Banking, finance & insurance
• Professional & business services
• Public administration & law enforcement
• Education services
• Health & social services
• Sports& entertainment
• Community & other services

Impact Channels & Shocks
• Lockdowns are simulated using a
range of impact channels
• Shocks to each channel are imposed on
the model & impacts are simultaneously
traced across all supply chains
• Multiplier model separates entire
India economy into 86 sectors
(Shocks imposed on final demand that
leads to the fall in production)
• Shocks estimated using:
• Community mobility data from Google
• Press Note on Estimates of GDP for Q1,
2020-2021 from Ministry of Statistics,
Government of India

Key Assumptions
• Lockdown period
• Government introduced national holiday for 9 consecutive weeks
(25 March to 31 May)
• 1-week lockdown period imposed in Q1 (January-March) while the
remaining 8-week imposed in Q2 (April-June)*
• Assumptions
• All shocks are imposed nationwide given the broad scope of the
government’s lockdown directive
• Shocks are weighted by importance of Q2-2020 for sectoral GDP
35%
30%
25%
20%
15%
10%
5%
0%
Total GDP Crude oil Crops Food processing Hotels & food services
Q1 Q2 Q3 Q4
* January-March is the fourth quarters of the government’s fiscal year (April-March)

Scenarios
1
3
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Q1 Q2 Q3 Q4
Full lockdown
period
Easing of
restrictions in Q3
Final easing by
end of Q4
(possibly incomplete
recovery)
Easing
restrict-
ions
during
rest of
Q2
2
1• Impacts during 9-week lockdown period (26 March to 30 May)
2 3• Impacts throughout 2020 by quarter
• Compare a faster vs. slower easing of restrictions

Economic Impacts During the
Lockdown Period
4

GDP Losses During Lockdown
National GDP drops 30% during the 9-week lockdown
(most economic losses occur in the industry & services sectors)
Assumes restrictions are not expanded or reintroduced
-30.3%
-0.7%
-42.0%
-31.4%
Total
Change in total GDP during
lockdown period (%)
Agriculture Industry Services
-$135.1
-$0.4
-$54.2
-$80.5
Total
Change in total GDP during
lockdown period (US$ bil.)
Agriculture Industry Services

Sources of GDP Losses
Falling in construction activities & restrictions on non-essential
manufacturing activities account for half of national GDP losses
Contribution of lockdown restrictions & shocks to
loss in total GDP during lockdown (sumsto 100%)
Large knock-oneffects on
manufacturing sectors, such
as textile industries
Closing schools has modest
negative GDP impacts
Remittancesis importantfor household
incomes & consumption spending,
which indirectly affects GDP
29.5%
20.6%
20.5%
15.5%
14.3%
3.1%
2.3%
2.1%
2.1%
0.9%
Limiting construction activities
Reduced export demand
Closing non-essential manufacturing operations
Closing non-essential wholesale/retail trade
Transport/travel restrictions
Domestic workers & other services
Banning sports & other entertainment
Closing all schools in the country
Closing hotels, bars and restaurants
Falling foreign remittances
Limited labor supply during lock down
largely affected constructionactivities
Fall in export due to disruptionin
globalmarket demand
Restrictionon people movement
reduced transport/travel services

-5.0%
0.7%
-6.1%
-11.9%
-33.6%
Impacts on the Agri-Food System
The largest impact from lock-down policy mainly hit food services,
while food supply is exempt from most restrictions
(food services are directly affected by the closing of hotels, restaurants & bars)
Share of
total GDP in
2019 (%)
(26.8%)
(17.2%)
(1.8%)
(6.8%)
(1.0%)
Change in agri-food GDP
during lockdown period (%)
Change in agri-food GDP during the
9-week lockdown period (US$ bil.)
-$5.1
$0.4
-$0.5
-$3.5
-$1.5
Agri-foodsystem
Agriculture
Agro-processing
Food trade and transport
Food services

Sources of Agri-Food System GDP Losses
Significant disruption on manufacturing and construction
activities created significant spillover impact to the food system
Contribution of lockdown restrictions & shocks to
loss in agri-food GDP during lockdown (sums to 100%)
Few agricultural exports directly
affected, but falling nonagricultural
exports reduces consumer incomes
& food demand
Falling remittances are also more
important for the food system
because households spend a large
share of their incomeson food
26.6%
23.6%
15.8%
13.5%
8.3%
7.1%
2.1%
1.1%
0.9%
0.5%
Closing non-essential manufacturing operations
Limiting construction activities
Reduced export demand
Closing hotels, bars and restaurants
Transport/travel restrictions
Closing non-essential wholesale/retail trade
Falling foreign remittances
Domestic workers & other services
Banning sports & other entertainment
Closing all schools in the country
Manufacturing and
constructionactivities are
worse affected reducing
householdincome and hence
food demand
Closing food services affected
overall food demand

Unpacking Agricultural GDP Impacts
Change in GDP during the lockdown (%)
Share of
agricultural GDP
in 2019 (%)
(3.7%)
(13.4%)
(3.5%)
(1.4%)
(12.5%)
(6.4%)
Bumper harvest in Rabi season
increasedmainly cereal production
Decline in investment spending &
constructionactivities reduces demand
for timber & wood products
Falling export demand hurts
export-orientedcrops, like cotton
-1%
0%
4%
2%
2%
2%
1%
-1%
-4%
-1%
-1%
-1%
-3%
-3%
Agriculture
Crops
Cereals (14.4%)
Pulses & oilseeds (6.8%)
Root crops
Fruits & vegetables
Sugarcane
Beverage crops
Traditional export crops
Livestock
Meat & eggs (6.0%)
Dairy (24.3%)
Forestry (7.6%)
Fishing
Sluggish demand coupled with
disruptionin transportationsector
caused reductionin fish supply

Unpacking Food Processing GDP Impacts
Change in GDP during the lockdown (%)
Declines in meat, fish, fruits & vegetables
driven by falling consumer demand with
implications for dietary quality
Combination of
Food processing
and Beverages &
tobacco share
make up 100%
(91.9%)
(13.0%)
(3.6%)
Demand reduction from restaurant and other
services activities generate negative spillover
effects on food processing industries.
Beverages & sugar refining badly affected by
closure of hotels and restaurants
-7%
-22%
-28%
-3%
-7%
-5%
-13%
-2%
-5%
-4%
-2%
Food processing
Meat (6.3%)
Fish
Dairy
Fruits & vegetables (2.7%)
Fats & oils (3.9%)
Cereal milling (34.6%)
Sugar refining (2.3%)
Coffee, tea, etc. (13.1%)
Other foods (12.4%)
Beverages & tobacco (8.1%)

Impacts on Household Incomes
All households experience large income losses
(smaller losses for rural farm households because farming/food trade is exempt)
Larger income losses for higher-income households
(but we do not consider how these households have savings &
assets that can help smooth income shocks)
-29%
-25%
-30%
-23%
-12%
-34% -33%
Change in household incomes during lockdown (%)
All households Quintiles 1-2 Quintiles 3-5 Rural Rural Farm Rural Nonfarm Urban

Poverty Impacts During the Lockdown
National poverty rate increases by 22%-points during the
lockdown period (≈ 295 mil. more poor people)
(poverty rate is the share of the population with
consumption spending below the national poverty line)
Increase in share of population living
in poverty during 9-week lockdowns
(%-points)
21.9%
21.8%
22.0%
National Rural Urban
Increase in number of poor people
in India during 9-week lockdown
(mil.)
295.5
210.5
84.9
National Rural Urban

5
Economic Impacts Under Fast & Slow
Easing of Restrictions & Recovery

Recent Data | Changing Mobility
People’s movements suggest a slow “return to normal” activities
(changes in mobility relative to Jan-Feb activity)
-80.0
-60.0
-40.0
-20.0
0.0
20.0
40.0
-100.0
W3 W4 W1 W2 W3 W4 W1 W2 W3 W4 W1 W2 W3 W4 W1 W2 W3 W4 W1 W2 W3 W4 W1 W2 W3 W4 W1 W2 W3 W4
Feb Mar Apr May Jun Jul Aug Sep
Source: Google mobility data
Percent
change
from
normal
activity
(Jan
to
mid
Feb)
retail and
recreation
grocery and
pharmacy
parks
transit stations
workplaces
residential

Easing of Restrictions & Recovery
Predicting India’s “post-lockdown” period is challenging
Consider two stylized scenarios:
Faster easing: Economy rebounds strongly in Q3 & largely returns to normal by Dec 2020
Slower easing: Modest rebound in Q3 with productivity in Q4 still below pre-lockdown levels
Fast Recovery
(faster easing & recovery)
Slower Recovery
(gradual easing, slow recovery)
Q1
Jan
No lockdown restrictions or global shocks in this “pre-COVID-19” period
Feb
Mar
9-week lockdown (last week of March until end of May)
Global shocks start in late-March
Q2
Apr
May
Jun Losses reduced by 50% Losses reduced by 10%
Q3
Jul
Losses reduced by 90% Losses reduced by 50%
Aug
Sep
Q4
Oct
Losses reduced by 99% Losses reduced by 90%
Nov
Dec

GDP Impacts with Recovery Scenarios
National GDP is 9-13% lower over 2020 as a result of COVID-19
(given pre-COVID-19 growth trends, India may well lose more than a year of growth)
-30.3%
-18.7%
-26.4%
-6.5%
-28.1%
-29.6%
-16.3%
-4.8%
-9.0%
-13.2%
April May-June Q1 Q2 Q3 Q4
-1.1%
-2.5%
2020
Change in quarterly & annual GDP under two recovery scenarios
(changes are relative to a no-COVID growth scenario)
Second quarter Quarterly averages Annual
Faster easing & recovery Slower easing & recovery

Cumulative Quarterly GDP Losses
Even with faster recovery, India ends 2020 with lower GDP
(GDP losses accumulate each quarter & will take time to recover to pre-COVID levels)
Cumulative changes in 2020 GDP from end of 2019
(pre-COVID expected growth rate for 2020 was 7.5 % according to IMF’s 2019 Economic Outlook)
200
150
100
50
0
-50
-100
-150
-200
End of Q1
2019
Q2 Q3 Q4
US$
billions
Pre-COVID expected growth
Lockdown + Faster easing & recovery
Lockdown + Slower easing & recovery

Poverty Impacts with Recovery Scenarios
1.4%
3.8%
0.6%
Poverty should stabilize by end-2020 as people return to
work, incomes recover & consumer demand resumes
(but this hides sharp spike in mid-year poverty, when many households living close to
the poverty line will require government or other support to cope
Change in national poverty rate with fast or slow easing of restrictions
(changes are relative to a no-COVID growth scenario)
21.2%
18.5%
10.2%
2.7%
Q1 Q2 Q3 Q4
Quarterly averages
Faster easing & recovery Slower easing & recovery

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