Abstract: The COVID-19 crisis will be penned down in history as one of the worst the world has undergone. Economically speaking, India is faced today with perhaps its greatest emergency since independence and ever since the pandemic has sneaked into the Indian Territory; it has claimed thousands of lives across the nation, virtually bringing the world economy to its knees with millions of people under lockdown. With thousands of death and challenges of not so well equipped medical system, this pandemic will devastate us financially as an economy and a nation. This paper examines the impact of COVID-19 on the global economy in general and the Indian economy in particular. It appraises the stimulus packages announced by the central government and assesses the potential impact of the shock on various segments of the economy government. It spells out policy changes to survive the downturn like to reduce uncertainty and improve growth scenarios by mobilizing all macroeconomic levers like fiscal, monetary and structural policies and retool and fortify the economy. It also emphasizes sharing and implementing best practices to support workers both employed and unemployed to name a few so that we can together beat this virus back and create a more healthy and hopeful tomorrow.
Key words: Coronavirus, COVID – 19, Economic Impact, Policy Implications.
The first case of COVID 19 was detected in Wuhan, Hubei Province in China in December 2019, since then more than 80,000 people in China was diagnosed with the infection and with its spread across the world leading to an outbreak, WHO declared Novel Coronavirus Disease (COVID-19) as a pandemic on 11 March 2020. Initially, it seemed that the pandemic would be limited and confined to China only. However, it spread all around the world through the movement of people out of China to other nations of the world. With the disease spreading rapidly in countries all over the world, WHO has called for countries to respond to the pandemic and to trace, treat, reduce transmission to save people’s lives and contain the on-going global health disaster. The health crisis increasingly becomes a financial one and the economic shocks out of it have caused gnawing pain and perhaps leaving deep scars in the global economy far larger than the other post-war pandemics. COVID-19 (novel coronavirus) has a far-reaching impact on society and business. It is not only spreading human suffering worldwide but also spreading economic suffering. Countries around the world are finding out measures to slow the virus down. Flights have been parked; towns and cities have been locked down and the governments have also urged people to stay at home.
Objectives of the Study
- To study the challenges and impact of COVID -19 on the economy of India.
- To underline policy changes to reduce uncertainty and improve growth prospects in the midst of an economic slowdown in India.
Materials and Methods
The research on COVID-19 is gaining momentum. The study is based on secondary data and relevant information and data have been collected from various publications in journals, articles, newspapers, editorials, analytical pieces, media houses, etc., available online.
The literature on the economic impact of past pandemics is vast but since the origin of 2020 recession is caused by a novel Coronavirus which is the first of its kind in history, the literature available is sparse. Whatever literature is available has been put to review to study the impact of COVID-19 on economies across the globe. The emergence of the pandemic is just six months old but the health and economic impact it has created is devastating. In one of the first well-structured efforts in the study of the pandemic, Baldwin and Di Munro (eds.) in their study draw our attention to the economic mayhem the pandemic has created on almost all major nations basically the G7 nations who in cooperation share and contribute 65percent of world manufacturing, 41percent of world manufacturing exports and 60percent of world supply and demand . Evans in his study underscores the socio-economic impacts of novel coronavirus across various continents and provides policy solutions inspired from previous pandemics like health literacy, national and international shifts in investments, PPP, etc., to overcome the epidemic.
Using a NiGEM global macroeconomic model, Boone, Haugh, Pain, and Salins (2020) at the (OECD) produced a simulated base-case (contained) scenario and a downside (broader contagion to the Asia Pacific, North America, Europe, and other advanced countries. The outcome of the study underscores that even the base shows a modest recovery after a sharp fall in global economic growth in the first half of 2020, the downside base marks a long-lasting growth slowdown due to a larger decline in confidence .Fetzer, Hensel, Hermle and Roth in their study on perception of Coronavirus and economic perception highlight how the global COVID -19 pandemic has affected economic sentiment in the US. In order to carry out their study, they document those participants’ subjective mental models which shape the extent of economic worries and understate the non-linear nature of disease spread. These results focus on the importance of public education about the virus for successful containment as well as the need for timely measures that decrease economic hardship and anxiety during a major global pandemic .Arezki and Nguyen examine the effects of a pandemic on the Middle East and North Africa due to impediments in the value chain, and tourism travels and disruption in oil price . Kumar’s way back home in India studies the sector-wise impact of coronavirus (COVID-19) on the Indian economy. The various sectors taken into consideration are foreign trade, electronics, auto industry, chemical industry, and poultry . Further, due to the prevention of cross-border travel in the EU, Meninno and Wolff underline major interruption of economic activity . Wren-Lewis in their study considers reduced workforce, reduced social consumption higher production cost, higher temporary inflation as the major reasons for slowing economic growth .
Fornaro and Wolf by using a variant macroeconomic model, show that the spread of the virus might cause a demand-driven slump, by forcing factories to shut down and disrupting global supply chains thus damaging an economy’s supply-side and capital formation .The COVID-19 pandemic and has sparked fears of an impending economic crisis and recession. The scholars in this connection summarise the socio-economic effects of COVID-19 on individual aspects of the world economy and call for medium and long term planning to re-assess, re-evaluate and revamp economies . In another study in India, scholars have given a few insights to business and the economic recession of the world economy and the Indian economy of before, during and after COVID-19. They give a few suggestions to improve the economy of India like all religious places entry fees to be collected by the government, investment in gold to be avoided, division of toll tax between states and centre, etc. . Peterson and Thankom have drawn attention to the impact of coronavirus on the global economy. Their study high points how the spread of the virus has heightened uncertainties in consumers, investors and international partners. This directed policymakers in many countries to respond to the coronavirus outbreak by making fast policy decisions that embarked on many countries into a recession .Suborna Barua highlights that COVID-19 is putting both developed and developing nations vulnerable. As such, containing the disease becomes more important than economic recovery. Innovative and aggressive policy actions coupled with massive supply-side supports can be initiated to avoid economic depression .The studies discussed above suggest that the pandemic is going to generate long-run and possibly unrelenting mayhem across economies, which could generate global economic deprsion.
Moon Moon Hussain1 and Rashmi Rekha Borah2
1Assistant Professor, Crescent School of Law,
B.S. Abdur Rahman Crescent Institute of Science and Technology, Chennai, India
2Assistant Professor, VIT Chennai Campus, Chennai, India
Corresponding Author Email:firstname.lastname@example.org