The document summarizes the impact of COVID-19 on the Indian economy. It discusses how the pandemic affected India's GDP, exports, imports and remittances. Key industries like agriculture, manufacturing, tourism and aviation were impacted. The Central and state governments as well as RBI implemented measures to boost the economy through increased spending, loan moratoriums and interest rate cuts. While many sectors struggled, some like pharmaceuticals saw growth. Overall, the economy is expected to recover in the coming fiscal year through reforms and a shift towards self-reliance.
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Impact of Covid on indian economy
1. IMPACT OF COVID ON
INDIAN ECONOMY
ASHUTOSH DAS B.TECH (EEE)- GET 2021
2. AGENDA
• Pre pandemic economic problems
• Impact on GDP : Export, Import &
Remittances
• Indian Industries: Sector wise
• Central Govertment Response
• RBI response
• State Government Expenditure
• Benefits
• Conclusion
3. PRE PANDEMIC/ LOCKDOWN ECONOMIC
PROBLEMS
• GDP: from 8% in Q4 FY18 to 4.5% in Q2 FY20
• The 2016 Indian Banknote Demonetisation
• Poor implementation of GST, 2017
• numerous banking crises such as
the ILFS crisis, NBFC, NPAs
• Government scheme failures such as that of
'Make in India‘
• High unemployement rate: 5.36% and Low
Demand
• Income crunch for Rural and Urban sectors
4. IMPACT ON GDP
• MoSPI: FY20 4.2%
• Q1 FY20 vs FY19: -23.9%
• MoSPI est. : Q1 FY21 vs FY20: -24%
• Soverign rating: Lowest in the
investment grade, affecting FDI
• Franklin Templeton: Closed 6 MFs in
India
• Reason: Logistics limitation, EXIM hit,
Remittances flow hit (-9%), high
unemployment (19%)
Agency Estimate
Fitch -5%
SBI -4.7%
Bernstein -7%
GDP prediction for FY 21
Agency Sovereign Rating
Moody Baa
Fitch BBB
S&P Global BBB
Sovereign Rating
5. IMPACT ON GDP
EXPORT, IMPORT & REMITTANCES
• Trade surplus in Jun in 18 yrs:
$790M
• Jun 2020 : exports fell by -12.4% y-
o-y
• Jun 2020 : imports fell by -47.6% y-
o-y
• Indication: Low domestic demand
• Drop in oil prices, Remittances
drop from $82.8 to $76 B
2.9
97.1
Remittances Others
Contribution to the GDP
6. INDIAN INDUSTRY
SECTORAL WISE
• Agriculture: PHFI and CSA -10% of farmers unable to
harvest their crop, 60% reported a yield loss, logistical
problems; in March 2020, tea exports fell 33% vs
March 2019. PM-KISAN - ₹17,986 Cr & Agri. Business
opened.
• Energy: Fuel demand drop: 15-20%, Night radiance-
Delhi: -37.2%
• Manufacturing: FMCG sector : Essential & Non
Essential
• Pharmaceutical: API imports around $3.5B/yr,
around 70% or $2.5B from China, majorly the Hubei
province. Demand high, production low, limit in raw
materials.
7. INDIAN INDUSTRY
SECTORAL WISE
• Shipping: per day per vessel has
declined by more than 75-80% in dry
bulk trade
• Tourism & Aviation: Restricted
movement
• Ecommerce: Restricted service, essentials
only.
• Defence: postponed all capital
acquisitions, no new major defense deals
• Automobile industry: Raw materials:
27% from China; Production low: BS VI;
Demand low
8. INDIAN INDUSTRY
SECTORAL WISE
• Stock: SENSEX fell 4000 points
(13.15%) and NSE NIFTY fell 1150
points (12.98%), biggest gains in
11yrs next day.
• Currency: sharp drop to 73.25 per
dollar in March, usually more
remittances - boost exchange rate
• Chemical & textile: Indigo from
China
• Solar power: PV cells fabricated in
China
9. CENTRAL GOVERTMENT’S
RESPONSE
• Expenditure increased
• Package announced to revive economic growth
• Schemes started: Atma Nirbhar Bharat, Matsya
Sampada Yojana, PMGKY
• FRBM act : used escape clause 0.5%, 3.3-3.8
• FD – FY20 4.6% to FY21 7% ; off budget financing
: 12% (CAG)
• Expenditure on Migrant workers for food and
mobility
10. RBI REFORMS
• Low repo rate
• Low reverse repo rate
• Inflation above 6% , target 4% +/- 200bps : WPI
and CPI
• To recover the demand and growth
• Moratorium on loans and EMI, Banking sector
and NBFC under stress due to NPAs
• I&BC (Insolvency and bankruptcy court)
• Foreign exchange increase
11. STATE EXPENDITURE
• Increment in expenditure
• GST compensation not provided : 2017-
2022
• Rs 3 lakh Cr had to be paid by the centre
• Act of God , Force Majeure : 1.38 lakh Cr
• Embargo on sale of Liquor for a brief
period: Revenue collection hit
• Petrol and Diesel prices increase: Excise
duty (Centre) and VAT (State)
• MPLADs removed for 2yrs
12. BENEFITS
• PPE kit exporter: 2nd in the World
• Generic drugs from India increased, Pharma
industry boom
• Life insuarance demand increased
• Reforms by the Govt.: MSME definition
change, long term reform schemes by the
Govt.
• MGNREGA employment increment:
infrastructure development
• Atma Nirbhar Bharat
13. BENEFITS
• Telemedicine – Digital Health
mission
• Financial inclusion with more
digitization
• Essential Commodities act
amendment : encouragement to
warehousing
• FDI to divert from China to India :
better infrastructure to be created,
SEZs
• Defence: FDI increased from 49%-
74%, corporatization of OFB and
14. CONCLUSION
• From liberal economy to protentionist or conservative economy ;From
multilateralism to unilateralism
• However, learn from this crisis and evolve into a better economy.
• India is considered to do better than many countries in the next fiscal year with V
recovery.
