Effects of the Covid-19 pandemic on the Indian economy

Introduction
The Economic Effects of the Covid-19 pandemic on the Indian economy
In March 2020, the World Health Organization (WHO) publicly declared the outbreak of the world’s most deadly pandemic, CORONA(COVID-19). The covid-19 virus, which originated from China, spread rapidly, prompting many countries into partial and complete lockdowns as the only positive measure of containing its spread. There was no immediate vaccination that could be adopted regardless of the increasing death toll resulting from the disease. Partial and complete lockdowns are doomed to affect many countries’ economies and the world at large. India is no exception due to the adoption of a nationwide lockdown, restricting the country’s morbidity of resources and from other countries affecting all industries and its economy at large.
In India, the first Covid-19 case was revealed on January, 30th 2020, and within the next two and a half months, the death toll rose to 400 while positive cases had reached the 10000 mark. Therefore, the sense of a dangerous situation in the future motivated the Government of India to affect the countries lockdown while monitoring the development trends of the deadly pandemic.
The obstruction caused by the disease has hit almost all developing economies and markets, such as India becoming weaker due to the financial disruptions, major economy’s sharp downturn, and tensions in the global trade. India is amongst the world’s fastest-growing economies with a 2.3% GDP value representation globally by 2019. And by 2020, India was representing 8.27 % of the world economy. However, India has recently faced a slow-down economic problem and eventually becoming stuck during the COVID-19 era. The pandemic has affected over 70% of Indias’ GDP leading to a quick fall in its economic growth performance.
This paper delves into analyzing the effects of covid-19 in various sectors of the Indian economy by assessing the present economic outcomes and evaluating various theoretical linkages.
review
According to (), covid-19 has brought a health crisis in India and a huge economic crisis. The restriction on travel, trade, and labor morbidity has largely created disturbances in the country’s demand and supply patterns. Additionally, the severe consequences of informal nature unemployment have been evidenced in most parts of the country since the beginning of the covid-19 pandemic. According to (), the tourism industry has been the worst affected sector in India and internationally as well. In 2020, the United Nations World Tourism Organization (UNWTO) estimated a 20-30 percent fall in foreign tourist visits. Recently, India’s tourism sector had been flourishing and contributed much to its economic growth.
According to (), India’s tourism sector has the largest market share in South Asia and was described as a tourism powerhouse by the FICCI-Yes Bank. The sectors accounted for about 10 percent of India’s total Gross Domestic Product (GDP), generating huge revenue. In 2018, US$247.3 billion revenue was generated besides creating about 27 million jobs for the countries growing population. Job creation is one of the most important contributions from the tourism sector due to India’s increasing unemployment rates.
Studies have indicated that the tourism sector is the 8th largest contributor to India’s GDP and has greatly boosted the aviation industry. However, since the introduction of containment measures for covid-19, the country has experienced major drawbacks in the tourism and aviation sectors. Studies have indicated a sharp decline in the revenues generated from both the tourism and aviation sectors due to the country’s imposition of movement restrictions. Foreign tourist arrivals decreased rapidly, especially during the beginning of lockdown pronouncements. Most Indian citizens were also rendered jobless due to the closure hospitality sector and aviation-related businesses.
Studies have also projected a sharp fall in India’s GDP growth rate as a result of the covid-19 pandemic. According to (), the United Nations (UN) had warned that the pandemic would significantly hit the global economy, and India’s economy was projected to decline by 4.8 percent. Consequently, the decline in economic growth has serious impacts of slowing the country’s development projects.
Studies have also indicated tremendous effects of covid-19 on the production and manufacturing sectors. Majors companies such as Bharat Forge, Grasim Industries, Dabur India, and L& T had put off their production completely. Similarly, logistics companies were highly affected by the pandemic resulting in the complete halting of their operations. According to () the obstruction of production and manufacturing sectors resulted in many job losses to the Indian citizens. The problem was very severe in urban areas, whereby most citizens ended up in starvation.
The agricultural sector is another sector that was affected by the coronavirus pandemic. The sector that contributes about 18% of the Indian economy was hard hit due to the withdrawal of support sectors such as logistics and labor force. Studies have showed declined agricultural production in India’s agricultural markets since the inception of covid-19.
Theory and hypothesis
In this research paper, the impact of covid-19 on India’s economy will be based on major economic indicators such as GDP, inflation rate, unemployment rate, industry output, and interest rate. The key economic indicators forecast is applied using three general possibilities: best, middle, and worst. The process will involve experimentation, observation, and statistical analysis of data provided by various agencies. A combination of data from different sources such as ICRA, ADB, Fitch, S&P will give a reliable forecast of the Indian economic growth in various economic indicators as mentioned.
GDP growth rate
The GDP growth rate cuts forecasts are estimated to go through moderate, average, and severe situations between 2020 and 2021. An estimation of India’s GDP growth for the next five years shows an increased performance. The growth rate is also expected to go through weak, moderate, and strong scenarios. For weak scenarios, a 0.5 positive growth rate is expected between 2021 and 2023. A moderate growth rate of 1% is also expected later and eventually an improvement in the following years to reach a strong rate of 2%. However, a strong economic recovery might result in higher growth rates.
Another economic indicator to be focused on will be the unemployment rates. India’s unemployment rate is expected to show massive growth between 2020 and 2021. During this period, the country was mostly hit by the pandemic compared to the next five successive years, whereby the unemployment rate is doomed to decrease. Most industries will resume their normal operations employing more people who have been rendered jobless. A weak rate of decline is expected to be experienced between 2021, followed by a moderate declining rate between 2022 and 2023. However, the rate is expected to show a strong declining rate from 2024 onwards due to most industries’ resumption of full operations.
Inflation rates are likely to be affected by the falling prices of oil prices, reducing demand, and governments’ efforts of supplying essential items during the covid-19 pandemic period. The long-term effects on inflation will depend on the economy’s moderate recovery. However, a weak economic recovery will have adverse impacts on inflation. Statistical data will be collected from government agencies showing inflation rate projections for a period of five years from 2020. A strong economic recovery between 2024 and 2025 will result in a rising inflation rate to 8% from a low of 6% between 2020 and 2021.
Interest rates estimate for between 2020, and 2021 have undergone several adjustments by the RBI, which took several bold steps to prevent the economy from the extreme effects of covid-19. The cash reserve ratio was reduced from 4% to 3% in addition to three months mandatory moratoriums on loan repayments to ease the pressure felt by borrowers. Just like other parameters such as inflation and unemployment rates, the interest rate will be determined by the economy’s recovery rate. A strong economic recovery rate will result in an average incremental rate of 0.5% annually, while a declining rate of 1% is expected in case of weak recovery rates.
Industrial outputs are also expected to face major drawbacks between 2020 and 2021, reaching the lowest output level. Most industries were highly affected by the restrictions of movement for important production factors such as labor and raw materials. However, the removal of certain restrictions at the beginning of 2021 will lead to recovery.

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