International Journal for Research in Engineering Application & Management (IJREAM)

ISSN : 2454-9150 Vol-06, Issue-01, Apr 2020

A Study on Impact of Covid 19 on Selected

Sectors of Indian Economy
Dr. Prashant T. Jariwala
Associate Professor, City C.U. Shah Commerce College, Opp. Dinbai Tower, Laldarwaja,
Ahmedabad, India. pjari66@gmail.com

ABSTRACT - The COVID 19 pandemic is the first human catastrophe affecting a number of people all over the world.
More than 175 countries have suffered due to cases of COVID 19, the diseases caused by the coronavirus (SARS-COV-
2). The economy of underdeveloped and developing countries are badly hit by this crisis. It directly effects on various
sectors of the economy which have major contributors in GDP. India is one of the most emerging economies in the
world. This paper attempts to focus the impact of COVID 19 on various sectors of Indian economy. Researcher is
focusing to address key issues in selected sectors due to COVID 19. They also try to suggest ways in which sectors are
likely to go forward in the coming days.

KEYWORDS: COVID 19, Economy, Sectors, Impact

I. INTRODUCTION GDP growth rate for 2019-201. As per recent data by NSO
our economy raised at 4.7% during the third quarter. It is all
Coronavirus pandemic was first testified in Wuhan, China time lowest in last six years.
in Dec. 2019. It is the large family of virus that causes
illness. This novel virus has not been recognized in humans Table 1.1 Quarterly GDP growth rate at 2011-12 prices
so far. It has already been spread to more than 175 countries (%)
in the world. Global economy is badly hit by this COVID YEARS Q1 Q2 Q3 Q4
19. The global economy is suffering the risk of global
2019-20 5.01 4.55 NA NA
recession as most of the nations have declared lock down
due to COVID 19. We cannot ignore that this crisis has a 2018-19 7.95 7 6.58 5.83
significant impact on economy includes trade, investment,
2017-18 5.99 6.77 7.69 8.13
commodities, logistics and supply chain. The global impact
of China’s slowdown is felt all over the world. It totally 2016-17 9.37 8.87 7.55 7.04
outbreaks disrupted the manufacturing supply chain and
2015-16 7.59 8.03 7.2 9.09
demand of commodities now it has spread to the service
sector also. Due to steadily going into shutdown economic Sources: - Ministry of statistic and programme
activity, clubbed with slow economic growth, especially in implementation, 29 NOV 2019
a developing country like India will lead to tremendously
volatile market conditions. Coronavirus will impact our Government has declared a 21 days lockdown to protect the
economic growth which will directly reflect in our GDP. people and also break the chain of this virus for spreading.
According to Arun Singh, Chief Economist Dun & Complete lockdown has brought most of the sectors
Bradstreet this lockdown will decrease in GDP growth rate (Except essential services. Public Administration and
which is expected to moderate further from earlier estimate Defense) to a cessation. It also impacts our GDP growth
of 5% for FY 20 and it will also be uncertain in FY 21. In rate. Private consumption, investment and external trade
this paper researcher has tried to find out the current and which are major contributors in GDP will have significant
potential impact of coronavirus on selected sectors of the impact due to COVID 19. China has already controlled
economy. COVID 19. New cases are brought down but the
coronavirus pandemic has now become black swan for
OVERALL IMPACT ON INDIAN ECONOMY
other nations including India. If our economy will recover
India is one of the fastest growing economies in the world. quickly by the mid of May, the growth rate may reach 5.3%
In 2017, as per data of World Bank, India stood on 6th rank
in largest economy with GDP of USD 2.59 trillion. Our
country is now suffering due to this global crisis. This
1 th
epidemic hit our economy which is seen in our third quarter Ministry of statistic and programme implementation, 28
th
February 2020, accessed on 25 March 2020

108 | IJREAMV06I0161053 DOI : 10.35291/2454-9150.2020.0265 © 2020, IJREAM All Rights Reserved.

 International Journal for Research in Engineering Application & Management (IJREAM)
ISSN : 2454-9150 Vol-06, Issue-01, Apr 2020

to 5.7%. In case lock down will be extended the growth rate suffering due to this outbreak. Due to lock down
may fall below 5%. production is totally shut down in the country. Normally
China imports 25% of automotive parts but now it is
OBJECTIVES
expected in 8 to 10 % contraction in Indian auto
 To study the impact of COVID 19 on selected manufacturing in 2020. Customers have already postponed
sectors of economy. their purchase so this sector will also need to wait for any
 To provide suggestions and recommendations new launches for even some time. After lockdown
regarding COVID 19. customers will first prefer to purchase their necessity of
goods like food, medicines they only spend for repair which
II. METHODOLOGY will be necessary for maintenance. So, we can say that this
It is a descriptive type of research and exploratory research crisis will have a long-term impact on the Auto sector.
design has been taken by researcher for doing this study. Aviation and Tourism
Secondary data have been collected for the research from
various sources like newspapers, articles in journals, The aviation sector has been most impacted by the spread
websites. To fulfil the objectives researcher has selected of COVID 19. It has the very first sector which has been
five sectors from industry and service, more ever researcher badly hit by coronavirus. The data of FY 18 shows that
exclude agriculture sector which is main occupation in these contributed 2.4 % and 9.2 % in our GDP. Rajasthan,
India. Majorly it depends on the season so the impact is Kerala. Goa, Gujarat and Maharashtra are the key states to
uncertain. Selected sectors are, visit for foreigners. Last year 10.89 million foreigners
visited India. Due to fear of COVID 19 and travel
 Building and Construction restriction, In Feb. 2020, 1.01 million foreign tourists
 Auto arrived in India compared to 1.08 million in Feb. 2019. This
 Aviation and Tourism shows the sharpest decreases since 2015 Due to COVID 19.
 Pharma Tour operators, travel agencies and branded hotels from
 Oil & Gas organized sector may incur huge loss around Rs. 1.58 lakh
crore according to Confederation of Indian Industry
III. IMPACT ON SELECTED SECTORS estimates. Apart from the organized sector, tourism also
Building and Construction gives employment to small house stays and small dhaba and
hotel operators will also take a major hit. The Indian
This sector is one the largest employment generator sectors
tourism and hospitality industry is staring at a potential job
in the economy, which is expected to contribute 13% to the
loss of around 38 million which is around 70% of the total
GDP by 2025. Due to lockdown, construction work has
work force. International and domestic airlines have been
totally shut down which may lead to losses on some
closed. Prices of fuel will decline but large cancellation of
projects. Due to the outbreak, the housing sector will need
tickets may incur huge loss for this sector. Job loss and
to wait for launching new schemes. In the first quarter of
salary cuts are likely in the high risk of aviation, tourism
2020(Jan.-Mar.) was much crucial for this sector as it
and hospitality it will lead the economy towards
accounts 30 to 40 % of their annual revenue. Many
unemployment. We cannot ignore the truth that the market
companies have already suffered due to weak financial
will come back to India in the next 12 to 18 months.
positions. The inflow of equity FDI would also slow down.
Even after recovery in the last week of April, the upcoming Pharma
monsoon will again obstruct their work. Materials like steel
The U.S. and Europe are our largest consumers for Pharma.
and iron ore which we import from China will also become
These economies are expected to slow down with
costly. Work from home is not possible in this sector
precautionary measures on trade which can have a flowing
because the workers’ physical presence is
effect on domestic Pharma companies in India. The clang
required. It will impact on employment.
on the pharmaceutical industry is of major concern for India
Auto as our 69% of Active Pharmaceutical Ingredients (API) are
imported from China (As per CRISIL Report). These
The Auto sector contributes 7.1% in GDP and also provides
ingredients are essential to a large number in Pharma
approximately 40 million employment in our country2. The
companies. Since pandemic started in China, supply from
impact of COVID 19 would depend on the extent of their
their ingredients has much reduced. Our companies have
business with China. The shutdown in China has prohibited
already created buffer stock for 2 -3 months so for a short
import of various components for the auto industry. Apart
time of period say 2 3 months there will be no much tension
from China our supplier Germany and Japan are also
due to adequate stock. Once Chinese companies’ restart
production, APIs will be resolved. If this outbreak will be
2 extended in China then we will have to pay higher costs for
Automobile and auto components sector overview, invest
th
India website, accessed on 25 March 2020 required ingredients for generics production. We can say

109 | IJREAMV06I0161053 DOI : 10.35291/2454-9150.2020.0265 © 2020, IJREAM All Rights Reserved.

 International Journal for Research in Engineering Application & Management (IJREAM)
ISSN : 2454-9150 Vol-06, Issue-01, Apr 2020

that there is a mixed gain and loss impact of COVID 19 on  Falling oil prices have a positive for Indian
Pharma. economy and there is a mixed impact of this
outbreak on Pharma.
Oil & Gas
 Consumption goes down in the present scenario
The overall demand of petrol, diesel and aviation turbines for many products like Auto, Real Estate, oil &
has fallen down which will reduce consumption from the petrochemicals, it directly affects the production. It
oil & Gas industry. The crude oil price correction has a may create a huge risk for the workforce.
mixed impact on Indian refiners. Crude oil prices have  Our economy is going through a major slowdown
fallen almost 20% to $55.14 per barrel in a month as China and resulted in the third quarter GDP growth rate
is one of the largest consumers. Oil sellers have been of 4.7 % which is the lowest in six years.
looking forward to alternative buyers in Asia for cargo  Tourism, Aviation and hospitality sectors are the
deliveries as demand from China fell down. India has been most affected sectors. Closing of domestic and
one of the beneficiaries of the COVID 19 outbreak in international airlines, restaurants, shopping
China. Our refiner BPCL has purchased shipwrecked complexes and allied sectors are facing maximum
consignment form Mediterranean regions at discount rate. impact.
On other hand India exports approximately 34%of  Some sectors may take tough decisions such as
petrochemicals output to China. Exports to China were hit cutting down salary or other cost cutting measures
due to the outbreak, so our refiners also found new markets for sustainment in this environment because their
immediately. Petrochemical prices will be further down economic activities are totally shut down.
stress due to COVID 19. In case of plastic it will have a
 For some sectors, work from home is a
positive impact as India imports most of cheap plastic
challenging task and is not possible for daily
materials from China. Due to COVID 19 our domestic
wages workers.
plastic manufacture will have gained in a long time. Our
 On the other hand we can say that India can have
domestic fuel prices depend on global oil prices so the fall
benefits in the medium term because companies
in global oil prices will lead to some inventory losses for
try to rely less on China as their materials,
Indian oil refiners. According to Moody’s weak oil prices
additional parts, ingredients will motivate
will reduce the profitability of oil and gas companies.
domestic producers and we expect that to
IV. FINDINGS AND CONCLUSIONS relatively increase GDP in upcoming years.

From the above study researcher has concluded that from V. RECOMMENDATIONS
the selected sectors Pharma, Auto and Aviation have been
Govt. should take some strong financial stimulus for the
impacted most by the outbreak of corona virus. According
middle and poor class of people so they will enable to
to research pharma and auto sector may also face the
purchase things which will help to sectors of economy to
challenges in supply chain if the lock down extends. It may
manage consumer demand.
lead price rise up to 10%.
Experts, industry members have also given their suggestion
WHO already declared COVID 19 outbreak as pandemic so
to recover the economy from this crisis. Our finance
panic riveted the financial market of all over the world
minister has already announced the relief packages and RBI
including India. Many brokerage firms and Credit rating
has taken steps and allayed the immediate concerns of the
agencies recently have undertaken the research for knowing
Indian sectors. Union Ministry of Tourism already told that
the impact of COVID 19 on the economy. Researcher has
the govt. will help the sectors by giving soft loans, working
made an attempt to analyze how this slowdown will impact
capital and deferment on loan repayment. Apart from that
selected sectors of Indian economy. Following are the
there is a need to take some steps for minimizing the impact
major findings concerning the objectives framed by
of this outbreak.
researcher. COVID 19 has disturbed our supply chain
management and it can clearly be seen form the following  To maintain working capital level by providing
findings. short to medium term loan s by banks and
financial institutions’
 The pandemic has a major impact on the Auto and
 To Increase the credit limits for regular bank
Construction sector as India imports automobile
accounts for overdraft and Commercial credit.
components and tires from China. Construction
 To give incentives to the employers so they can
and Real estate also suffer due to materials. It may
keep their workers after recovery.
create price volatility in materials. In the short
term these inventories are adequate but for a long  To give capital assistance for small and medium
term it may cause losses for these sectors. scales industries.
 Income tax reduction on loan for attracting the
customers especially in Auto sector.

110 | IJREAMV06I0161053 DOI : 10.35291/2454-9150.2020.0265 © 2020, IJREAM All Rights Reserved.

 International Journal for Research in Engineering Application & Management (IJREAM)
ISSN : 2454-9150 Vol-06, Issue-01, Apr 2020

 To stay of GST payment for some period to

remove liquidity crisis.
 Some special relief in excise taxes, in electricity in
Tourism sector and treat them as a priority sector
lending.
 To give relaxation for project delays in Real estate
 The need to reduce dependence on china for APIs
and crate partnership with European countries and
U.S for better opportunities to export our
pharmaceutical products for long time.

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111 | IJREAMV06I0161053 DOI : 10.35291/2454-9150.2020.0265 © 2020, IJREAM All Rights Reserved.