Impact of lockdown on economy

On March 24, 2020, Prime Minister Narendra Modi addressed the entire nation at 8 pm. 

He mentioned that India will be in 21 days lockdown, starting from midnight. Though this looks just as the demonetisation announcement, this time, it is to fight a far more dangerous threat than black money and corruption.This time we are fighting against a virus that has shown its impact in more than 150 nations. By no doubt, such threat needs a drastic measure as a lockdown. However, the lockdown and the virus threat will have some serious impact on Indian Economy.

Indian economy which was already under some pressure due to the problems like rising NPA was doing fairly good only because of the consumption drive of the nation. With this lockdown, the consumption will be seriously hurt. People would not be able to spend on things they earlier did for leisure like movies, dining out and shopping. Simply put, the discretionary spending will be at an all-time low in the coming quarters. This will have also some short-term impact on the GDP and stock markets alike.

This surely is a small price to pay for the safety of the people. Organisation for Economic Co-operation and Development (OECD) has lowered Indian GDP growth estimate for 2020 by 1 per cent. The stock markets all over the world already seem to start factoring such as slowdown in the aggregate world GDP growth with a steep downslide in all the major stock markets with Indian stock market being no exception. Perhaps, with the fear of virus fading away in near future, we will see a sharp rise in GDP as well as in the stock markets all over the world.

Impact on several industries

(1) India jewellery sales are set to fall to the lowest in a quarter-century, i.e. in 25 years, as a result of the lockdown to combat the rapidly spreading Coronavirus, which has brought the industry to a sudden halt.

(2) With the cancellation of passenger trains across the country till March 31 due to coronavirus, Indian Railways is likely to face around Rs 1,700 crore losses.

(3)Coronavirus Impact: Stock market investors lose Rs 12 lakh crore in 6 trading sessions.

(4) Indian entertainment industry stares at losses due to coronavirus effect

Global losses

WORLD GDP TO FALL 2.8% IN 2020, EXCEEDING FINANCIAL CRISIS TOLL

World Bank  said that  India's economy is expected to grow 1.5 per cent to 2.8 per cent in 2020-21 fiscal which started on April 1. This will be the slowest growth rate recorded since the economic reforms of 1991.

Acuite Ratings & Research Ltd earlier this month estimated that the lockdown will cost the Indian economy almost USD 4.64 billion (over Rs 35,000 crore) every day and the entire 21-day lockdown will result in a GDP loss of almost USD 98 billion (about Rs 7.5 lakh crore).

Hence corona virus has affected the economu very badly. And the loss is going to be more higher.

AUTHOR:

ANCHAL KAUSHIK

BBA 4TH SEM

ROLL: 49180123