How has Coronavirus effected the Indian economy
The global pandemic of the Coronavirus aka the COVID-19 has not only taken a toll on the health of humans but has also contributed towards the breakdown of the global economy.
With the global economy hit worst since the COVID-19 outbreak from February 2020 onwards, let us focus on the Indian economy for now.
The coronavirus outbreak might cost the global economy $1-2 trillion in 2020, according to the UN Conference on Trade and Development. Its potential impact on the Indian economy is not yet known, but several sectors are already feeling the pain already.
Aviation sector
Starting with the worst, around 585 international flights cancelled by private carriers as on March 6th 2020. In a bid to curb the outbreak of COVID-19, India on March 12 suspended almost all visas for a month, adding to the woes of airlines.
As of March 6, Indian private carriers had cancelled 93 international flights and global airlines 492 flights. With the cases in India increasing rapidly, travelers are afraid to fly internally, leave alone internationally.
Indigo, India’s largest airline, has reported a 15-20% decline in daily bookings over the past few days. Kapil Kaul, chief executive for aviation consultancy CAPA India says the impact of coronavirus on the airlines will be deeper than the epidemics in the past.
Hospitality sector
Around 35% fall has been reported in the restaurant business so far, with the numbers only widening. As the country has been imposing a travel ban on the masses, it will only lead to empty hotel rooms and restaurants.
Kapil Chopra, founder and CEO of Postcard Hotels & Resorts, says average occupancy in these hotels could fall from 70-75% to 20%, if they haven’t already, even as demand in holiday destinations continues to be strong.
With people becoming more and more aware, the restaurant business is also slowly dying down, with a decline of 30- 35%. With the malls being shut down, the restaurants in the mall have also a declining business.
That being said, the delivery segment is seeing the least impact. With people restricted to quarantining, they are ordering food from food delivery giants, trusting their hygiene levels.
With theatres being shut down, the movie business is also seeing a downfall in its economy. Blockbuster films like Soorvayanshi and No Time To Die have been postponed to a yet unknown date.
Apparel sector
India exported over Rs 1 lakh crore of garments in 2018-19, according to the ministry of commerce. Exports bring in 60% of Indian apparel makers’ revenues.
Europe alone accounts for a third of India’s garment exports. But with the region being declared the new epi-centre for the disease by the World Health Organization, new orders are bound to be affected.
Apart from that, the decline in the footfall at the stores also continues to grow due to the masses being quarantined.
Consumer durable and electronics
India has seen a 15% decline in mobile shipment from January-March. India, however is breathing a sigh of relief as factories in China resume operations as the cases taper off in their country. But on the other hand, as the spread of the disease continues to rise in India, fewer people have been visiting the stores.
India imports around 45% of its consumer durables from China, according to CRISIL. India also relies heavily on China for components like compressors for air conditioners and open cell TV panels.
Poultry and seafood sector
The demand for chicken has reduced by 30% over the last 3 weeks. The Government had already warned people to stay away from meat, leading to the decline in poultry and seafood.
As far as seafood is concerned, India’s worries are more on the export front. Seafood exports brought in Rs 46,600 crore in 2018-19, with the US, European Union and China being the top markets, according to the Marine Products Export Development Authority.
Though the number of Covid-19 cases in China has been on the decline, it is not clear if the US and Europe have seen the worst yet.
This is how the Coronavirus has affected the Indian economy. With no respite in the number of cases rising each day, we can only expect the worst to come.
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