Impact of Coronavirus on indian economy.

What is the impact of Coronavirus on Indian Economy?

COVID-19 cases in India cross 12,000 and death toll crossing more than 500. More than 200 countries and territories are reported with novel coronavirus pandemic. How it will impact the Indian economy? Let us find out..

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Today We discuss about the impact of Coronavirus on indian economy.

In terms of trade, China is the world’s largest exporter and second-largest importer. It accounts for 13% of world exports and 11% of world imports.  

Up to a large extent, it will impact the Indian industry. 

In imports:

the dependence of India on China is huge. Of the top 20 products that India imports from the world, China accounts for a significant share in most of them.

India’s total electronic instruments account for 45% of China. Around one-third of machinery and almost two-fifth of organic chemical
that India purchases from the world come from China? For automotive parts and fertilisers China’s share in India’s import is more than 25%. 

Around 65 to 70% of active pharmaceutical ingredients and around 90% of certain mobile phones come from China to India.

Therefore, we can say that due to the current outbreak of coronavirus in China, the import dependence on China will have a significant impact on the indian industry.

In export:
 China is India’s 3^rd largest export partner and accounts for around 5% share. The impact may result in the following sectors namely organic chemicals, plastics, fish products, cotton, ores, etc.

We also can’t ignore that most of the Indian companies are located in the eastern part of China. In China, about 72% of companies in India are located in cities like Shanghai, Beijing, provinces of Guangdong, Jiangsu, and Shandong. In various sectors, these companies work including Industrial manufacturing, manufacturing services, IT and BPO, Logistics, Chemicals, Airlines, and tourism.

It has been seen that some sectors of India have been impacted by the outbreak of coronavirus in China including shipping, pharmaceuticals, automobiles, mobiles, electronics, textiles, etc. Also, a supply chain may affect some disruptions associates with industries and markets. Overall, the impact of coronavirus in the industry is moderate.

According to CLSA report, pharma, chemicals, and electronics businesses may face supply-chain issues and prices will go up by 10 percent. The report also says that India could also be a beneficiary of positive flows since it appears to be the least-impacted market. Some commodities like metals, upstream and downstream oil companies, could witness the impact of lower global demand impacting commodity prices.

According to CII, GDP could fall below 5% in FY 2021 if policy action is not taken urgently. It is said that the government should take some strong fiscal stimulus to the extent of 1% of GDP to the poor, which would help them financially and also manage consumer demand.

In the third quarter (October-December) growth is slowed down to 4.7% and the impact of COVID-19 will further be seen in the fourth quarter. 

Ficci survey showed 53% of Indian businesses have indicated a marked impact of COVID-19 on business operations. And 42% of the respondents said that up to three months could take for normalcy to return.

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