Coronavirus (COVID-19), a virus that grew stealthily has become one of the deadliest viruses that is killing people worldwide. This virus took birth in Wuhan city of China and since then have travelled to more than 160 countries. The World Health Organization (WHO) has declared Coronavirus as a pandemic. It has become a mass scare and is leading to the deaths of thousands of people in numerous countries including China, Italy, Iran, Spain, the US and many more. In India, this pandemic started on 30 January 2020 by affecting an individual who had travel history from Wuhan, China.
Impact on India’s GDP
World economy is seeing its greatest fall ever. Corona virus has largely impacted the growth of almost every country and is responsible for the slump in GDP worldwide. Like other countries, India is also impacted by this virus but not largely. Almost every industry sector has seen a fall in their sales and revenue. India’s GDP growth has fallen to 4.7% in third quarter of 2020.
Efforts from CII and Govt. of India
Confederation of Indian Industry (CII) has suggested the RBI to reduce repo rate up to 50 basis points and also asked for a reduction of 50 basis points on cash reserve ratio. Government is planning to setup an amount to support MSMEs to overcome the crisis during this phase of shut down, cash flow difficulty and working capital issues.
Inflation and Affected Industry
China is one of the largest exporters of many raw materials to India. Shutting down of factories has damaged the supply chain resulting in drastic surge in the prices of raw materials. Some of the other products that has seen a rise in their prices are gold, masks, sanitizers, smartphones, medicines, consumer durables, etc. Aviation sector and automobile companies are hardest hit among the rest. With no airplane landings or take-offs globally and restricted travel has brought aviation and travel industry to a halt.
Slump in Share market
Share markets that include Sensex and Nifty are on nose dive since the occurrence of this pandemic (COVID-19). Sensex has declined close to 8000 points in a month. As on 12 March 2020, share market investors have lost approximately Rs. 33 lakh crore rupees in a month. This could be the beginning of a recession that Indian market will never want to witness. Investors are advised to stay safe and invested in this virus-infected stock market. Few industries that can benefit from novel coronavirus during the time of market crash are pharmaceuticals, healthcare and Fast Moving Consumer Goods (FMCG).
Cash flow Issue
Due to this outbreak, almost 80% of Indian companies has witnessed cash flow difficulty and over 50% of companies are facing operations issues. As per Federation of Indian Chambers of Commerce and Industry (FICCI) 53% of companies are impacted by COVID-19. Slow economic activity is resulting in cash flow problems eventually impacting repayments, interest, taxes, etc.
Steps and measures by Government of India
To avoid the large impact of this outbreak, India has taken some measures that include corporate tax cuts, increased moratorium period, fiscal stimulus up to Rs. 2 lakh crore to needy people through their Aadhar based benefit transfer. Presently, the best option for investors is to invest in mutual funds or Systematic Investment Plans (SIPs). With the help of SIPs, people can invest a fixed amount every month in various mutual funds schemes available in today’s financial market.
Government of India started taking measures from the start of this pandemic. Some of the key measures taken by the Government include:
- Orders of self-isolation or self-quarantine
- Travel restrictions
- Sanitizing on large scale
- Disabling group gatherings
- Closing inter-state borders
- Screening at domestic and international airports
- Banning entry of foreigners
- Denial of any form of Visas to any country
- Helping in recovery of several positive cases
- Increasing the numbers of testing centres
- Lock-down of cities, districts and even states
- Shutting down schools, colleges, temples, malls, shopping centres, local bazaars, gymnasiums, cinema halls and various facilities of public gatherings
- Providing work from home option for employees and much more.
As of now there is no light at the end of the tunnel and people are facing hard times. Indian economy is not highly impacted, as compared to economies of nations like China, Spain, Italy, Iran or USA. as India started taking early precautionary measures to prevent the spread of coronavirus.
Financial year 2019-2020 is about to end and during this phase Indian economy is facing testing times in which instant or fast recovery is not possible by any means. To overcome this financial crunch situation or to reduce their loss, entrepreneurs and MSMEs can opt for business loans as per their requirements.
However, with people’s persistent patience, will and determination can fight back and win over COVID-19 disease. Every individual on this planet has to stand and fight against this pandemic. People need to remove coronavirus from its roots and start to rebuild the Indian economy from the point it will fall.