COVID-19, the pandemic is a severe demand shock that has offset the green shoots of recovery of the Indian economy that was visible towards the end of 2019 and early 2020.
The revised Gross Domestic Product (GDP) estimates for India downwards by 0.2 percentage points for the fiscal year 2020 to 4.8 percent and by 0.5 percent for the fiscal year 2021 to 6 percent.
Further, it is stated that the extent of the actual impact will depend upon the severity and duration of the outbreak.
How COVID-19 is affecting INDIAN ECONOMY?
Sectors that would be much affected includes logistics, auto, tourism, metals, drugs, pharmaceuticals, electronic goods, MSMEs and retail among others
There are three major channels of impact for Indian businesses according to the report namely linkages, supply chain, and macroeconomic factors.
The data of the Dun & Bradstreet shows that at least 6,606 Indian entities have legal linkages with companies in countries with a large number of confirmed COVID-19 cases. And business activity in the foreign markets is slow which is a negative impact on these companies.
In trade, China is the world’s largest exporter and second-largest importer. China accounts for 13% of world exports and 11% of world imports.
How China affects Indian economy ?
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 imports account for 45% of China. That is Around one-third of machinery and almost two-fifths of organic chemicals that India purchases from the world come from China? For automotive parts and fertilizers, China’s share in India’s imports is more than 25%. Around 65 to 70% of active pharmaceutical ingredients and around 90% of certain mobile phones come from China to India.
China is India’s 3rd 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 and Beijing.
It has been seen that some sectors of India have been impacted by the outbreak of coronavirus in China. It also includes shipping, pharmaceuticals, automobiles, mobiles, electronics, textiles, etc. Also, a supply chain may affect some disruptions associates with industries and markets.
So this is How COVID-19 is affecting INDIAN ECONOMY. Hope you gained some new information from the blog. STAY HOME STAY SAFE.