Impact of Corona Virus(COVID-19) on the Indian Economy – I
The outbreak of COVID-19 is expected to have a very significant impact on the world economy in general and the Indian economy in particular. The impact ranges from recession, supply chain disruptions and is expected affect trade for at least the next two years.
The rating agencies have slashed the Indian GDP growth projection for the current financial year from 5.2% to 2.5%. While Crisil has cut its base GDP growth forecast from 5.7% to 5.2% in 2021, S&P has reduced the Indian GDP growth projection from 7% to 6.9% in 2022. The projections of Fitch ratings are starker with GDP growth projection of 5.1%, 6.4% for 2021 and 2022 respectively.
The Indian industry had urged relief measures namely, fiscal and monetary stimulus measures to deal with the impact of COVID-19 on the Indian economy. The government of India has announced fiscal stimulus measures and has constituted an economic response task force to deal with the situation. On its part, RBI has announced a series of monetary measures to contain the impact of COVID-19 on the Indian economy.
According to a recent Crisil study, the most vulnerable sectors, in terms of sector revenues, are Cars, commercial vehicles, auto components, two wheelers, tyres, airlines, cotton yarn, gems & jewellery, sea food, construction, leather, aluminium and steel. The sectors that are reasonably resilient to weather the COVID-19 storm are telecom, fertilizers, agri-chemicals, FMCG, IT services, power, hospitals and pharmaceuticals.