IMPACT OF LOCKDOWN ON ECONOMY

IMPACT OF LOCKDOWN ON ECONOMY

To control the spread of corona virus, the government of India decided to make lockdown for the entire nation. Corona virus disease (COVID-19) is an infectious disease caused by a newly discovered corona virus.

The COVID-19 virus spreads primarily through droplets of saliva or discharge from the nose when an infected person coughs or sneezes. At this time, there are no vaccines or treatments for COVID-19. The primary way to keep safe ourselves and the only way of breaking the COVID-19 infection cycle; is to make social distancing. That’s why our prime minister of India Mr. Narendra Modi declared a three week nationwide lockdown from 25 March 2020. The first priority of our nation is to save life of an every single person because “If we have life, we have the world”. There is also a major impact of lockdown directly and indirectly on economy. The Indian economy is expected to lose over Rs. 32,000 crore every day during the 21-day-lockdown. Supply chains of row materials for the infrastructure and for the production of a company have been put under the stress with the lockdown restrictions in place. The live events industry has been an estimated loss of Rs. 3,000 crore. The 75% of India’s workforce is either self-employed or casual workers, they would be the worst affected during this lockdown. Sensex and Nifty market also have a fall down of 35% from January 2020, which is highest downfall in his history. During the lockdown; one of the major effect on the place of visits like; historical places, may be badly affected. Not only in India but also in the global economy, it will likely cost between $1 trillion and $2 trillion in 2020.

IMPACT ON TEXTILE INDUSTRIES:

The economic point of view, a major concern is the future of textile industry. The demand for textile products sales have come down to a grinding halt due to the panic situation created by the COVID-19. Due to the lockdown, all sorts of textile related factories are closed and it is tough to hazard a guess when those will be allowed to open. Workers have been running here and there amid all sorts of confusion. The business community is sacred on account of cash crunch, supply chain disturbance and manpower related issues. India has more than 2,000 spinning mills with different spindle capacity. Workers in big units controlled by corporations reside in labor colonies adjacent to the factory premises. The majority of workers are migrants from Bihar, Uttar Pradesh, Orissa and other states. At present they are being taken cared by the employers. Some workers were force to stay back in the absence of means of transport following the lockdown. Once the lockdown is lifted, there is a possibility that many of them will rush to their hometowns or villages. This will be result direct loss to mill owners. During this lockdown, textile industries stare at Rs. 12,000 crore loss and large amount of worker’s job at risk. 

IMPACT ON SHARE MARKET:

The first two rounds of corona virus outbreak have wiped off Rs. 52 lakh crore  worth of equity investor wealth, with benchmarks sensex and nifty languishing at multi-year lows after falling 35 % from their January peaks. The next third round of corona virus will be seen a hazardous impact on share market. Although, there will be no real statistics yet, how much negatively growth we see in the future.

              

IMPACT ON GDP:

The quarterly GDP growth has consistently fallen since Q4 of FY18. If there is a deviation in Q4 of FY19, as shown in the graph below, it is because the National Statistical Office (NSO) revised its data on February 28, 2020, drastically cutting down growth rates in the first three quarters of FY19 (from 8% to 7.1% for Q1; from 7% to 6.2% in Q2 and 6.6% to 5.6% in Q3).

                      

What could be the magnitude of the impact of a complete social and economic shutdown may not be estimated easily, but it is likely to be far more severe than either the 2016 demontisation or the 2017 rollout.

IMPACT ON TOURISM:

India’s tourism sector with the industry estimating an overall loss of Rs. 5 lakh crore and job cuts 4-5 crore people. Sources in the Union Ministry of Tourism said the government is considering helping the sector with soft loans, working capital and deferment on loan repayments. The ministry itself, in a presentation to a parliamentary panel on transport and tourism last month, had pegged the losses at Rs. 5 lakh crore, quoting industry estimates.

Other than the organized sector, the tourism industry also gives employment to small home-stays, bread and breakfasts and small hotel operators and their services will also take a major hit.

There are many more severe impacts on Indian economy which hits during this lockdown, but once we overcome this pandemic situation of COVID-19 our economy will automatically get back on the growth track.

               

AUTHOR:

Rahul Kumawat

(4919136, B.Tech 2nd semester. )