Coronavirus disease (COVID-19) is an infectious disease caused by a newly discovered coronavirus. The effects of corona can be seen worldwide. It has drastically affected people mentally and financially. The increasing unemployment rate and an alarming economic situation are the two formidable problems to be dealt with as a result of this outbreak. India's growth for the financial year 2021 was originally revised by the world bank and other rating agencies, it was India's lowest figure till today. GDP downgraded to negative figures leading towards a deep recession. The contradiction expected to be seen by India in the FY21 will not be standardized, rather it will vary according to different parameters such as state and industry. There is likely to be no contradiction in the agricultural and government sectors. On 1 September 2020, GDP figures for the first quarter of the financial year 2021 were released by the ministry of statistics and program implementation, which showed a contraction of 24%.
The following effects can be seen on India's economy, due to corona:
1.Moody's cited as an explanation for the revision of the extreme impact of the lockdown, realized in the 23.9% decline in the April-June quarter of gross domestic product (GDP), and the continuing spike in covid-19 incidents.
2. Global rating agency Fitch has estimated Indian banks need up to $50billion to deal with the after-effects of the stresses induced by the covid-19 pandemic. Considering the changes in bank operations DBS Bank CEO, Piyush Gupta said Indian banking systems will face serious asset and capital challenges in the next 12-18months.
3. Financial commission has an impossible task of performing balancing act in the covid times. The financial report of the FFC, due October 30, may recommend that the fiscal responsibility and budget management act (FRBM) and state level fiscal legislations, which give Centre and States specific targets and cap deficits be suspended.
4. It will take around September quarter of 2023 for India and the world to be back to pre-covid level in terms of economy as per global managing partner McKinsey & company.
5. As per the Finance ministry report total government liabilities rise to 101.3 lakh cr. In Q1. Nearly 28.6% of the outstanding dated securities had a residual maturity of less than 5years adding the ownership pattern indicates a share of 39% for the commercial banks at the end of June 2020.
6.India changed its foreign direct investment (FDI) policy to curb "'opportunistic take overs/acquisitions' of Indian companies due to the current pandemic", according to the Department for Promotion of Industry and Internal Trade. With the fall in global share prices, there is concern that China could take advantage of the situation, leading to hostile takeovers.
7. A number of young startups have been impacted as funding has fallen. A DataLabs report shows a 45% decrease in the total growth-stage funding as compared to Q4 2019.
8. India's exports in April 2020 fell by -36.65% year-on-year, while imports in April 2020 fell by -47.36% as compared to April 2019.
9. India’s industrial production dropped sharply in April when the country went into lockdown and most factories were not in operation. The index contracted by 55.5% compared with the same period a year earlier. That includes sectors such as mining, manufacturing and electricity. Manufacturing of consumer durables saw the sharpest decline for the month.
10. Business activity in the services sector also fell drastically in May as the pandemic hindered operations, reduced footfall in shops and led to a decline in demand. The number last month was 12.6 and IHS Markit said in its report that survey data “still pointed to extreme month-to-month declines in output and new orders.”