At the end of 2019 and at the beginning of the New Year, people living in Wuhan province of China started complaining about chest pains and showed symptoms similar to Pneumonia. After further investigations were carried out, they were diagnosed with a new type of virus, of the coronavirus family which, later, was named as COVID-19 by the World Health Organisation (WHO).
Some days later, it was declared a pandemic and soon there was chaos everywhere.
The virus spread quickly all over the world and reached almost every country. Currently, 42,091,581 people have been already infected, and 1,144,279 declared dead due to the virus. In India alone, more than 7.7 million people are infected, out of which more than 1.1 million people have succumbed to it.
Not only has it caused panic in the health sector, but has destroyed the global economy to a great extent.
All the entities that are essential for the proper functioning of an economy are badly hit due to this unforeseen circumstance. All nations, including the most developed ones, are finding it difficult to get their economy back on track. Millions of people are unsure about their jobs. With most of the businesses shut for an extended period of time, employees as well as employers are under an immense psychological and financial burden and are finding it difficult to adjust with this abrupt change.
India, which was one among the fastest-growing economies of the world, has also been hit quite badly. The GDP (Gross Domestic Product) was already on a downfall since last some quarters and adding to the plight, cases of COVID-19 started rising consistently at the same time. With a view to check the increasing number of cases per day, Government of India decided to impose a complete lockdown for 21 days, which started from March 25, 2020, and brought the whole country to a standstill. Since the number of cases kept increasing by each passing day, the lockdown had never been lifted completely for many months.
The industries were shut down for more than a month. This created outrage amongst the workers. However, more than a month later, the Government of India allowed most of them to reopen, with half of their manpower working in each shift, providing momentary relief. But, since most of the workers already left the cities, the acute shortage of labourers was inevitable and may result in inefficient output from the industries. In addition to that, the lack of raw materials and disruption in supply chains has made manufacturing a difficult task now.
Not only the industries but COVID-19 has had a profound impact on India’s trade and businesses as well. Indian stock markets started to tumble rapidly when the cases related to COVID-19 started increasing in the country.
Many of the top-performing stocks have come to their all-time low as soon as W.H.O declared COVID-19 a pandemic. For example: In the month of October the previous year, IPO (Initial Public Offering) of the state-owned monopoly, Indian Railway Catering and Tourism Corporation (IRCTC), was listed at twice its offer price of ₹320. By end of February 2020, it peaked to almost ₹2,000. But by March 17, it lost its value nearly by 50%. This is also true for most of the global stock markets. The average fall in each of the stock markets is 25-30% range.
The Bombay Stock Market too showed similar trend during this period. Sensex, the most popular market index of 30 companies listed under Bombay Stock Exchange, fell from a peak of 42,000 points this January 17 to below 32,000 in three months. It is only now that the share market is seen to be rising with some pace.
However, it is difficult to predict the movement of the stock market in the near future. When there is panic, the investors decide emotionally, and not rationally. The current situation of the world may be termed as a ‘Black Swan’ event, and its impact may even be deeper and longer than was expected in the very beginning.
This ongoing crisis has impaired the supply chains. Import and export businesses are suffering huge losses. Merchandise exports declined by a record 34.6% in March while imports declined 28.7% after countries sealed their borders to tackle the COVID-19 outbreak. One of India’s largest exports is business and professional services, which consists of business process outsourcing (BPO) viz. technical support and call centres largely based in India. This sector has been severely affected due to the lockdown measures in both the origin and destination countries.
Restaurants, cinema halls and other major public spots are closed and are scheduled to reopen. This has surely decreased the amount of revenue flowing to the government’s treasuries. The E-commerce sector, too, has suffered losses due to the COVID-19 crisis as logistics pertaining to unessential goods and some other activities were completely disallowed for many days.
However, e-commerce services are allowed in certain zones as of now, but the damage has already been done. People are reluctant to buy non-essential products, such as electronic gadgets and apparels which used to generate a lot of revenue for those firms. However, on a good note, people are choosing to buy medicines and groceries online and this will certainly make up some portion of the loss that has already happened. People across the country are trying their best to adjust to this unprecedented situation. Government has also put in all its efforts to tackle the menace.
But the fact that some enterprises, especially the Micro, Small and Medium Enterprises (MSMEs) will not be able to recover easily from the losses they suffered during the lockdown period is true. Hence, stimulus packages by the government are of utmost necessity for supporting them in order to thrive in future.
Indian Government has declared two stimulus packages as of yet, the one in the month of March was valued at a meagre 0.8% of the GDP, while another declared on 12th May is robust and is valued at about ₹20 lakh crore (10% of GDP) that includes Rs 1.7 lakh crore package of free foodgrains to poor and cash to poor women and elderly. It will cater to various sections including the cottage industry, MSMEs, labourers, middle class and industries. This will help the virus-hit businesses to some extent but more such packages are required in future to cover-up the losses.
As the country is gearing up to re-open soon despite the consistent growth in the number of cases related to COVID-19, the onus lies upon the public to deal with the virus responsibly adhering to the guidelines laid down by the concerned authorities. The businesses should adjust themselves to the new normal by wearing masks and frequent hand-washing and should also actively monitor the employees to make sure that no one is putting lives in danger until a permanent solution for this problem is made feasible by the researchers working tirelessly all around the globe.