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ECONOMICS ASSIGNMENT
THE EFFECTS OF COVID 19 PANDEMIC ON THE INDIAN
ECONOMY

INTRODUCTION:

The economy of world nations on the global aspects seems to be in a devastated situation
due to effects of the ongoing COVID-19(corona virus) pandemic situation. The world’s
powerful nations like U.S.A, Russia, etc. are facing a terrible grievous suffering in the sense
of public health and economy as well, and they are hustling against the pandemic situation to
have a disguise against this awful situation. The situation in India also seems to be getting
worsen than expected and economy of India is stumbling and wobbling in a devastated
manner as the ramification or aftermath of the pandemic situation continues to exist with an
uncertain conclusive end. This paper tends to analyze the effects of the Indian economy with
respect to the covid-19 pandemic and its socio-legal framework aspects like Economic
stimulus - Public finance - Public Health - Migration/ Labour - International Trade -
Manufacturing - Economic slowdown - Poverty, inequality, social welfare. The government
of India announced the complete lockdown during the eve of march 2020 as precautionary
measure to ensure the safety of the citizens of the country being prevented the adverse spread
of the virus. But the lockdown hit the economy of the country in a worse manner. The basic
essence of economics is prevailing as an inevitable thing in our lives as it deals with
management of resources of humankind by human.

IMPACT OF COVID-19 IN INDIAN ECONOMY:

The Covid-19 had the adversely led to the causation of the national lockdown in India which
constituted to the effect of “Recession or Depression” in the nation’s economy. As all the
sectors of the nation was been under shutdown, the standard of the survivability was being
scrutinized and, it was really a tough situation for the lower-economic class society of people
and their livelihood has been put at stake. The time were the supply and demand for most
FMCG goods was being withheld the production in various sectors were shut and the total
primary, secondary and tertiary sectors of the nation’s economic activities were almost been
doomed by recession. The government on the measures for preventing the decline of the
economy and bring it by to resurrection in a proper manner were being planned. The
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periodical time lapse of this lockdown and economic fallout can either be eminence of
transience or recurring ,as the this situation tends to remain ambiguous as the insurgence of
the public for their livelihood being violated due to the lockdown norms for the prevention of
the spread of the virus , and for the resurrection of the economy back to a normal wave graph
in the sector will be tempestuous and turbulent. The situation for the country in economical
aspect is pretty badly affected as there arises the conflict of inequality in income and the
government intervention policies perhaps beneficial for the concentrated group of people and
also the sybarites aren’t affected in either manner as their livelihood remains the same as
there no adverse effect on the wealth they poses but the worker who gains his income on the
daily wages are adversely affected and hit worsen by the imbalance of the financial situation.
As the revenue for the government on the forms of taxes, GST on goods purchased, are being
withheld and the people on the unstable economic background are inefficacious of paying the
taxes as their revenue source is ruined. So, on the whole both the individual and the nation
are ruined by the adverse recession due to the lock down, and the government proposes new
implications for the renovation and resurrecting flourishment of economy by giving stimulus
packages focusing on the internal trade and procuring only the internal nations products to
stop the intervention on the imported foreign trade goods and its taxes.

-ECONOMIC STIMULUS AND SLOWDOWN:

“Economic stimulus is action by the government to encourage private sector economic

activity by engaging in targeted, expansionary monetary or fiscal policy based on the ideas of
Keynesian economics. The term economic stimulus is based on an analogy to the biological
process of stimulus and response, with the intention of using government policy as a stimulus
to elicit a response from the private sector economy. Economic stimulus is commonly
employed during times of recession. Policy tools often used to implement economic stimulus
include lowering interest rates, increasing government spending, and quantitative easing, to
name a few.”1

First generally under the ability to understand the situation in our country as the financial
year in India beings from 1st of April of every year and the its been divided into four quarters
with each a time span of 3 months for a particular quarter. As, the situation of the recession
period was held in the Q1 quarter of the financial year the budget for each sector was under
vex as the there no stipend in the very beginning.
1
Chappelow Jim, “Economic Stimulus”, Investopedia, 27/04/2020,
https://www.investopedia.com/terms/e/economic-stimulus.asp
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“In effect, there has been no large-scale giveaway by any country, rich or poor, as a response
to Covid-19. The Indian government may have studied many such models and has tried to
create its response within constraints. the Indian government could have done to revive the
economy, which has stalled due to Covid-19. PM Modi announced a Rs 20 lakh crore
stimulus package—close to 10% of the Indian GDP. The figure of Rs 20 lakh crore is also
very similar to the entire tax receipts of the central government for FY21, if the year did not
have Covid-19 related problems. Subsequently, India’s finance minister provided details of
the stimulus package over five days. The stimulus package is a mix of fiscal support,
monetary support, ease of doing business processes, as well as some fundamental reforms.
Across the world, country stimulus responses vary from 1% of GDP to 12%. Rich countries
seem to have announced larger stimulus packages (5-10%) and developing countries have
announced smaller packages (2-5%). No country seems to have done large giveaway
programmes except for the impoverished in rich countries. Even forgivable loans seem to be
connected to keeping employees for much longer than what the eligibility for a business is,
putting an actual additional burden on the businesses instead of solving their problems. The
second common factor in the stimulus packages has been the money to be spent on providing
and improving health care available to citizens. Indian response to Covid-19, across states,
has been generally commendable given the real tough situation, even the richest countries
find themselves in. It is a testimony as much to the skills and commitment of Indian medical
professionals but also of the hard work put in by non-state actors across India. Many
economists and commentators have mentioned that the government announcement on
stimulus of Rs 20 lakh crore tries to resolve only supply-side issues. There is nothing to bring
in additional demand. It could be done by way of putting money in the hands of people—
without work or by creating large scale infrastructure projects creating demand for manpower
and goods alike. I hope the government is working on the demand revival side packages
without hurting the fiscal discipline too much.”2

As the government further more introduces many more stimulus packages beneficial for
many aspects but still it is impossible to satisfy the entire nation with it as there are few
groups who never really need these schemes, so they capable enough to handle the any worse
financial crisis as they have financial stability. They point is that these packages can be a
building block in the resurrection of the economy from the asserting recession. The rational

2
Ashish Kumar Chauhan, “Explained: The real measure of India’s stimulus package”, “financial express”,
22/05/2020, https://www.financialexpress.com/opinion/explained-the-real-measure-of-indias-stimulus-
package/1966846/
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way of the facts is that there are many more sectors like manufacturing, trading, etc., and
each require an alternate solution for each as its unequivocal that each are different in the
paths that’s affirmed in the workstyle of their pattern.

PUBLIC FINANCE, PUBLIC HEALTH, MIGRATION/LABOUR,

INTERNATIONAL TRADE, MANUFACTURING:

The above-mentioned aspects are considered to be the crucial and important factors that
determines that flourishment of the economy of a country. The public health is of the utmost
concern of the country as the virus tends to wreck our health on the contrary the wealth that a
human possesses. The main virtue of the public health in economy is that , as far as the
government fraternity is concerned with the finance for the more premature area and most
important area were the budget needs to allocate more funding to the health department for
the welfare and hygienic fraternity among the public of the nation. The public finance is also
to be given as per the utmost importance as it regulates the funding for the general terms. The
finance on the part of the funding for the public factor’s matters are that the country’s
“overall economic package was announced as ₹20 lakh crore (US$280 billion), 10% of
India's GDP. The package, though announced on 12 May by the Prime Minister, included
previous government actions, including the RBI announcements” 3 The rate that ought to be
certain in this uncertain situation still remains uncertain as the instability of the market and
procurement of the demanded completely shifted. The presumption mentality of the public to
spend and invest is been affected drastically as the level income, revenue and expenditure is
altered due to uncertainty in the uncertain situation. “Manufacturing stands as one of the
worst affected sectors in the economy, especially the auto industry. The problem with this
sector runs deeper than what was briefly mentioned above. The manufacturing sector
accounts for nearly 20% of the GDP with the automotive sector contributing almost half of
this number. Due to the pandemic manufacturers are forced to lower production due to
reduced lower sales. Also, the demand has come down as the consumers are putting off their
purchases for a later time. The workers in the sector are also under a pinch as the companies
are forced to enforce pay-cuts to lower their cost of production.”4

3
Iyer. P Vaidyanathan, Math behind Rs 20-lakh crore economic package, The Indian Express,15/05/2020,
https://indianexpress.com/article/explained/the-math-its-10-of-gdp-but-less-than-5-cash-outgo-pm-modi-relief-
packages-6407302/
4
Prof. R. Jayaraman, ‘The COVID 19 Lockdown and the Indian manufacturing industry – effects and
recovery’, manufacturing today India, May 13, 2020.
<https://www.manufacturingtodayindia.com/sectors/7361-the-covid-19-lockdown-and-the-indian-
manufacturing-industry-effects-and-recovery>
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“According to a survey conducted by UNIDO, restarting business will be a very challenging

task, particularly for MSMEs. With 30%-70% of the workforce migrating back to their home
towns, workforce will be a particular problem for the companies when the production
resumes. Other problems include the degradation of the machinery and raw materials during
the time they were idle and ensuring that the raw materials are supplied timely and available
at an appropriate price once the production starts again.”5 The mentioned references give the
crux that the revival of the small scale manufacturing sectors are in a grave-critical acclaimed
situation. E.g., a company which produces notebooks, as they only produce according to the
demand of the market and since the lockdown most institutes only require online mode of
education and digitalised mode, and the requirement of notebook perishes and the employee’s
lives are put on stake.

As the part of health is concerned as the primary concern in the situation, the government
allocated funds on medic-kits, precautionary measures and treatment for the insurgence is
being taken care off. “Beyond its immediate neighbours, India has also provided extensive
aid to other nations worth some INR 32 Cr (which includes transport costs of INR 9.7 Cr)—
this comprises 72 percent of its committed aid as of 3 June. Furthermore, Procurement Orders
of approximately INR 60 Cr have been issued to supply aid in the form of drugs, testing kits
and other medical assistance to Myanmar, Latin American and Caribbean (LAC) states, and
12 countries in the African continent. The drugs being supplied as aid by India to other
countries are primarily Paracetamol (PCM) tablets and the much talked about COVID-19
prophylaxis, Hydroxychloroquine (HCQ) tablets. India has already supplied PCM tablets to
10 of the 30 countries it has made a commitment to, and aims to provide a total of 3.18
million tablets worth an estimated INR 0.3 Cr. While experts are still deliberating whether
HCQ indeed works, it currently stands as the closest preventive drug for the infectious
disease. India’s help in this regard is therefore crucial. More pertinently, the Indian
Pharmaceutical Alliance (IPA) estimates that India has the capacity to produce around 40
tonnes of HCQ per month, which is around 70 percent of the world’s total supply. Already,
India has supplied 2.945 million HCQ tablets worth INR 1.031 Cr to 24 countries through
grants. A further five million HCQ tablets worth INR 1.75 Cr have been approved for 28
LAC states, and another 1.9 million HCQ tablets valued at INR 0.665 Cr for 19 African
states. In total, India is committed to provide some 10 million HCQ tablets to 76 countries

5
René Van Berkel, ‘India's manufacturing reels from the impact of COVID-19’, unido.org, April 24 2020 <
https://www.unido.org/stories/indias-manufacturing-reels-impact-covid-19>
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across the globe.”6 In the aspects of import and export on the in the agenda of international
trade, “international trade and investment are directly affected in this period of turbulence.
According to the WTO, “world trade is expected to fall by between 13% and 32% in 2020 as
the COVID 19 pandemic disrupts normal economic activity and life around the world.”
Further, there are unprecedented outflows of direct as well as portfolio investments from a lot
of emerging markets. Latest estimates by UNCTAD suggest that the downward pressure on
FDI flows could range from -30% to -40% during 2020-2021. In India, the data by National
Securities Depository Ltd. indicate a massive withdrawal by foreign investors of over Rs 1
lakh crore in March 2020.With these kinds of reports doing the rounds, the prospects for the
global trade and investment look quite bleak in the near future. In view of the looming
uncertainty and the socio-economic setbacks being faced by numerous countries (developed
as well as developing), India should focus on drawing lessons from the upheaval and rethink
about the ‘normal’ ways of doing trade and investment.”7 The government insist the purchase
on the local Indian made goods to improve the GDP and the national income and the only
encourage the Indian goods to be exported and reduce the imported goods.

POVERTY, INEQUALITY AND SOCIAL WELFARE:

The lockdown associated with covid-19 led to the devastating crisis among the citizens of
the country. Due to the recession period many people lost their income source as to the
unemployment reasons it tends to increase the poverty scale is increase its feared that it may
tend to increase, “n the second week of April 2020, UN’s International Labour Organization
(ILO) claimed that about 400 million workers from India’s informal sector are likely to be
pushed deeper into poverty due to Covid-19. There is no dispute that poverty in the country
will worsen, but the question is, by how much? We try to answer this using National Sample
Survey Organization (NSSO) and Planning Commission data. Through its quinquennial
consumption expenditure surveys, NSSO presents estimates of monthly per capita
consumption expenditure (MPCE) of households in the country. This data forms the basis for
estimating poverty levels, as was done by the erstwhile Planning Commission. From NSSO’s
consumption data, the Commission estimates poverty thresholds, based on which poverty
ratios in Indian states and UTs were estimated. It may be noted that MPCE is taken as proxy

6
HARSH V. PANT, ANANT SINGH MANN, “India’s public health diplomacy in the time of COVID19”, observer
research foundation,13/06/2020, https://www.orfonline.org/expert-speak/indias-public-health-diplomacy-in-the-
time-of-covid19-67783/
7
Niti bhasin, “International trade during Covid-19 crisis: Lessons, rethinking and a silver lining for India”, times
now news,20/04/2020, https://www.timesnownews.com/business-economy/economy/article/international-trade-
during-covid-19-crisis-lessons-rethinking-and-a-silver-lining-for-india/580539.
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for income.”8 The level of the inequality that prevails between each economical class of the
society and each class faces different financial instabilities during the lockdown that its
perspective and not retrospective. The social welfare is lies underneath the goodwill rather
than anything specific and it only arises out of humanity which is non economical at my
presumption.

CONCLUSION:

The conclusive part for this paper is just the doctrinal analytical perspective work which
arises out the certain ambiguous exists as the work is based on the secondary data work
analysis and everything in the concern is out what we analyse out of that has been analysed
and there no specific certainty will take place in this situation here itself is out of paradoxical
uncertainty of the conclusion that is uncertain. The only thing that we can assure is to hope
for the good and prosperity that is to give strength to all people who are battling against lives,
and poverty to overcome this recession.

REFERENCES:

1.Chappelow Jim, “Economic Stimulus”, Investopedia, 27/04/2020.

2. Ashish Kumar Chauhan, “Explained: The real measure of India’s stimulus package”,
“financial express”, 22/05/2020.

3. Iyer. P Vaidyanathan, Math behind Rs 20-lakh crore economic package, The Indian
Express,15/05/2020.

4. Prof. R. Jayaraman, ‘The COVID 19 Lockdown and the Indian manufacturing industry –
effects and recovery’, manufacturing today India, May 13, 2020.

5.René Van Berkel, ‘India's manufacturing reels from the impact of COVID-19’, unido.org,
April 24 2020.

6. HARSH V. PANT, ANANT SINGH MANN, “India’s public health diplomacy in the time
of COVID19”, observer research foundation,13/06/2020.

8
Swetha Saini, COVID-19 may double poverty in India, financial express, 30/04/2020,
https://www.financialexpress.com/opinion/covid-19-may-double-poverty-in-india/1943736/
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7. Niti bhasin, “International trade during Covid-19 crisis: Lessons, rethinking and a silver
lining for India”, times now news,20/04/2020

8. Swetha Saini, COVID-19 may double poverty in India, financial express, 30/04/2020.

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