Impact of covid 19 virus on trade and commerce

1. IMPACT OF COVID-19 VIRUS ON
TRADE AND COMMERCE
IN
INDIA
ASST. PROF. MRS. SHUBHADA GALA
18TH APRIL,2020

2. TIME LINE OF COVID-19 IN WORLD AND INDIA
• 31 DEC 2019 : CHINA REPORTED A CLUSTER OF CASES OF PNEUMONIA IN WUHAN, HUBEI PROVINCE. A NOVEL CORONAVIRUS
WAS EVENTUALLY IDENTIFIED.
• 12 JANUARY 2020: CHINA PUBLICLY SHARED THE GENETIC SEQUENCE OF COVID-19.
• 13 JANUARY 2020 :OFFICIALS CONFIRM A CASE OF COVID-19 IN THAILAND, THE FIRST RECORDED CASE OUTSIDE OF CHINA.
• 30 JANUARY 30, 2020 : WHO DECLARED PUBLIC-HEALTH EMERGENCY. INDIA REPORTS ITS FIRST CASE OF COVID-19 IN
KERALA.
• MARCH 7, 2020: POSITIVE COVID-19 CASES CROSSED THE 100,000 MARK. 100 COUNTRIES WERE INFECTED BY THIS TIME.
• MARCH 11, 2020: WHO DECLARED COVID-19 AS A PANDEMIC.
• MARCH 12, 2020: FIRST DEATH WAS REPORTED IN INDIA DUE TO COVID-19.
• MARCH 16, 2020: CENTRAL GOVERNMENT INDIA ORDERED ALL INSTITUTIONS, SHOPPING MALLS, THEATRES, GYMS TO BE
SHUT UNTIL MARCH 31.
• MARCH 22, 2020: INDIA OBSERVED JANTA CURFEW FOR A DAY.
• MARCH 24, 2020: PRIME MINISTER MODI ANNOUNCED 21-DAY LOCKDOWN IN INDIA.
• APRIL 13, 2020: CORONA VIRUS CASES IN INDIA CROSS 10000 MARK`
• APRIL 14, 2020 : PRIME MINISTER CONTINUED LOCKDOWN TILL 3RD OF MAY

3. IMPACT ON GDP
• THE ASIAN DEVELOPMENT BANK ESTIMATES THAT THE LOCKDOWN WOULD TAKE ABOUT 2.3% OF GDP.
• KPMG SAID THE COST OF THE 21-DAY LOCKDOWN IN INDIA COULD BE $120 BILLION.
• ALL THE AIRLINES EXCEPT AIR INDIA HAVE GROUNDED THEIR DOMESTIC AND INTERNATIONAL FLIGHTS,
THE LOSS OF WHICH IS ESTIMATED TO BE $600 MILLION.
• IN INDIA, THE SERVICE SECTOR ACCOUNTS FOR 55% OF GDP.
• IT IS ESTIMATED THAT THE LOSS TO THE TOURISM AND HOSPITALITY INDUSTRY WILL BE $2.1 BILLION
FOR MARCH AND APRIL ALONE.

4. IMPACT OF CORONA-RELATED SLOWDOWN
IN CHINA.
• AT THE GLOBAL LEVEL, INDIA IS AMONG THE 15 ECONOMIES MOST IMPACTED
BY THE CORONA-RELATED PRODUCTION SLOWDOWN IN CHINA.
• FOR EXAMPLE, 18% OF AUTO-COMPONENT IMPORTS, 45% OF CONSUMER
DURABLES AND 67% OF ELECTRONIC COMPONENTS COME FROM CHINA. THE
TRADE IMPACT IS ESTIMATED TO BE GREATEST FOR THE CHEMICALS,
TEXTILES, APPAREL AND AUTOMOTIVE SECTORS.

5. IMPACT ON AGRICULTURE AND SUPPLY CHAINS
• NON-AVAILABILITY OF MIGRANT LABOR IS INTERRUPTING SOME HARVESTING ACTIVITIES,
PARTICULARLY IN NORTHWEST INDIA WHERE WHEAT AND PULSES ARE BEING HARVESTED.
• THERE ARE DISRUPTIONS IN SUPPLY CHAINS BECAUSE OF TRANSPORTATION PROBLEMS
AND OTHER ISSUES.
• PRICES HAVE DECLINED FOR WHEAT, VEGETABLES, AND OTHER CROPS, YET CONSUMERS
ARE OFTEN PAYING MORE.
• MEDIA REPORTS SHOW THAT THE CLOSURE OF HOTELS, RESTAURANTS, SWEET SHOPS, AND
TEA SHOPS DURING THE LOCKDOWN IS ALREADY DEPRESSING MILK SALES.
• MEANWHILE, POULTRY FARMERS HAVE BEEN BADLY HIT DUE TO MISINFORMATION,
PARTICULARLY ON SOCIAL MEDIA, THAT CHICKEN ARE THE CARRIERS OF COVID-19.

6. IMPACT ON STOCK AND FOREX MARKET
• THE INDIAN STOCK MARKET ON MARCH 23 SUFFERED ITS WORST SINGLE-DAY
ROUT IN HISTORY,
• THE NSE NIFTY 50 INDEX SANK 12.98% TO A NEAR FOUR-YEAR CLOSING LOW,
WHILE THE S&P BSE SENSEX FELL 13.15% TO 25,981.24.
• THE RUPEE HIT A RECORD LOW OF 76.16 AGAINST THE U.S. DOLLAR.

7. IMPACT ON EMPLOYMENT
• IN URBAN AREAS, LEADING TO THE WIDESPREAD LOSS OF JOBS AND INCOMES
FOR INFORMAL WORKERS AND THE POOR. ESTIMATES BY THE CENTRE FOR
MONITORING INDIAN ECONOMY SHOW THAT UNEMPLOYMENT SHOT UP FROM
8.4% IN MID-MARCH TO 23% IN THE FIRST WEEK OF APRIL.
• IN URBAN AREAS, UNEMPLOYMENT SOARED TO 30.9% AS OF APRIL 5.
• SELF-EMPLOYMENT IN INDIA WILL SUFFER DUE TO THE SEVERE RESTRICTIONS
BEING PLACED ON THE MOVEMENT OF PEOPLE, GOODS AND SERVICES WITHIN
AND ACROSS THE BORDERS.

8. IMPACT ON DEMOGRAPHY
• THE VAST MAJORITY OF THE NURSES, TEACHERS, FLIGHT ATTENDANTS AND
RESTAURANT WORKERS IN INDIA ARE FEMALE, AND THEIR JOBS PUT THEM ON
THE FRONTLINES OF THEIR VIRUS OUTBREAK BOTH AT WORK AND HOME. IT
WILL WORSEN GENDER EQUALITY IN THE SHORT TERM.
• IN THE LONG-TERM, SOME GROUPS WILL BE DISPROPORTIONATELY IMPACTED
BY THE LABOR MARKET CRISIS, INCLUDING YOUTH, OLDER WORKERS AND
MIGRANTS.

10. Impact of COVID-19 on Sectors in India
Sectors Impact Recovery
period
Pharmaceutical Moderate Short term
Non Food Wholesale & Retail Severe Short term
Transport Severe Medium
Term
Automobile High Long term
Cinema Halls Severe Long term
Banking High Long term
Tourism & Hospitality Severe Long term
Gem & Jewellary Severe Long term
MSME High Long term

11. RELIEF MEASURES BY GOVERNMENT
• THE INDIAN GOVERNMENT HAS QUICKLY RESPONDED TO THE CRISIS AND ANNOUNCED A
$22 BILLION RELIEF PACKAGE, WHICH INCLUDES FOOD AND CASH TRANSFERS. SEVERAL
STATE GOVERNMENTS HAVE ANNOUNCED THEIR OWN SUPPORT PACKAGES.
• IT OFFERS TO PAY VERY SMALL BUSINESS ENTERPRISES THAT HAVE BEEN FORCED TO
SHUT DOWN THEIR OPERATIONS AND ALSO EMPLOYEES EARNING SMALL SALARIES.
• BUT IT DOES NOT SAY ANYTHING ABOUT MEDIUM- AND LARGE-SIZED BUSINESSES THAT
MAY RUN OUT OF CREDIT AND BECOME INSOLVENT.
• THE RESERVE BANK OF INDIA ALSO REACTED METHODICALLY AND CREDIBLY, WITH
THEIR DECISION TO REDUCE THE REPO (REPURCHASE) RATE BY 75 BASIS POINTS TO
4.4%.

12. RELIEF MEASURES BY GOVERNMENT
• THE CENTRAL GOVERNMENT’S RELIEF PACKAGE, CALLED PRADHAN MANTRI GARIB KALYAN
YOJANA (PRIME MINISTER’S PLAN FOR WELL-BEING OF THE POOR), IS AIMED AT PROVIDING
SAFETY NETS FOR THOSE HIT THE HARDEST BY THE COVID-19 LOCKDOWN.
• THE GOVERNMENT HAS PROVIDED RS. 500 ($6.60) PER MONTH TO THE BANK ACCOUNTS OF
200 MILLION WOMEN VIA THE JAN DHAN FINANCIAL INCLUSION PROGRAM
• HOWEVER, IT IS INADEQUATE COMPARED TO THE ENORMOUS SCALE OF THE PROBLEM.
• THE $22 BILLION IN SPENDING IS ONLY 0.85% OF INDIA’S GDP.
• INDIA SHOULD THINK BIGGER, AND BE SPENDING AT LEAST 4% TO 5% OF GDP. THE CENTRAL
AND STATE GOVERNMENTS MUST SPEND MORE, EVEN IF THERE IS ONE-TIME HIKE IN THE
FISCAL DEFICIT.