Assessing The Impact Of COVID-19 On The Indian Economy

By- Jonathan

The devastating impact of the COVID-19 pandemic has been felt all over the world. Aside from the tragic human cost, the financial state of many nations has been left in tatters. In this article, we'll take a detailed look at the effects on the Indian economy and reveal which sectors have been the winners and losers.

Pharmaceuticals

As one might expect given a global health crisis, the pharmaceuticals industry within the country has continued to boom. As the biggest exporter of generic medicines in the world, the sector was already on an upward growth curve prior to the pandemic. Believed to be worth around $55 billion in early 2020, a surge in demand for drugs like Hydroxychloroquine has only continued to grow this number.

However, for several reasons, it is becoming increasingly difficult to satisfy that spike in demand. The government has opted to ban exports of certain drugs and equipment, in order to protect the country's own reserves. In addition, the pandemic has caused all kinds of problems with the supply chain, making it harder to import the necessary raw materials.

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When you then throw rising costs, workforce issues and taxation problems into the mix, the picture begins to look much gloomier. We can expect those positive numbers to take a hit in the coming year.

Agriculture

Farming is the platform upon which the Indian economy is built, so it is reasonable to expect minimal damage to this sector. However, leading up to the pandemic, the country's agricultural workers were already complaining about falling incomes and the rising cost of materials.

For the past year, Indian farmers have been protesting against reforms. Negotiations are continually breaking down and the sector looks to be in disarray. To make matters worse, moving goods around the country is proving problematic. Local governments are allowing the free transportation of essentials such as fruit, dairy produce and meat. But unclear and contradictory laws around the movement of vehicles are causing logistical issues.

Tourism and Travel

These are probably the hardest hit sectors of the industry, due to global travel restrictions. The closure of hotels, airlines and more is expected to lead to 70% of the total labour force being laid off. That's around 38 million people losing their jobs.

In the long-term, booking, boarding and various other elements of the travel process will be greatly improved. But that will be little consolation to those affected by the projected loss of approximately 85 billion rupees to the industry.Photo by Rupixen on Unsplash

Despite aviation and tourism having been brutally impacted by the pandemic, there is a minor silver lining. Improvements in technology have been sped along by the need for contactless transactions. In the long-term, booking, boarding and various other elements of the travel process will be greatly improved. But that will be little consolation to those affected by the projected loss of approximately 85 billion rupees to the industry.

Handicrafts

Around the world, we saw a huge rise in people turning to handicrafts. Not only are such activities a fun way to pass time, they can save you money when times are hard. Not to mention the positive impacts on mental health. Despite this global trend in leisure crafts, India's professional craftsmen and women have been struggling during the pandemic.

The country is the second biggest exporter of textiles, with around 90% of the planet's hand-woven materials originating from India. As consumers lost jobs and were forced to tighten their belts, the demand for hand-crafted decorative and luxury items fell sharply. The government has failed to offer sufficient support for the small and medium sized businesses which underpin the sector, leaving many in peril.

Online Gaming

With so many forced to remain at home for long periods, it's perhaps little surprise to discover that online and mobile gaming apps are booming. Titles like Call of Duty: Mobile, Coin Master and Clash of Clans are proving immensely popular as people find new ways to pass the time.

Although many of these better-known games are produced outside of the country, there has still been a positive impact for locally-based development companies. One example is Gametion Technologies from Mumbai. Their popular Ludo King app saw a huge spike in demand during the pandemic.

Also read: How Is The South Asian Economy Recovering From Covid-19

As people seek new revenue streams, gambling apps are also benefiting. People have more time than ever and many spend it scouring comparison sites to find welcome bonuses at licensed bookmakers. Such offers tend to include free bets, which can be used at Indian betting sites on a wide range of markets, particularly cricket matches. But other offers exist too, such as loyalty programs, cashback deals and risk-free bets. These comparison sites also offer other useful information to do with betting licenses, popular payment methods like Skrill and withdrawal times.

Oil and Fossil Fuels

After China and the USA, India is the next largest energy consumer. The country is responsible for a little over 5% of the world's demand for oil, the bulk of which comes from transportation fuel. Thanks to the total lockdown of the country, the requirement for oil and gas plummeted. The knock-on effect to the wider sector has understandably been huge.

An additional blow to the industry came when the government raised taxes to try and make up for the lost revenues. Even though the price of crude oil fell, the end consumer felt a price rise. This type of policy will do more harm than good.

(Disclaimer: This article is sponsored and contains some commercial links)