economics project grade 12

1. Presented at: "Economic Impact on COVID-19 in India"
INTRODUCTION
The COVID-19 pandemic has resulted in over 1.4 million confirmed cases and over 83,000
deaths globally. It has also sparked fears of an impending economic crisis and recession.
Social distancing, self-isolation and travel restrictions forced a decrease in the workforce
across all economic sectors and caused many jobs to be lost. Schools have closed down, and
the need of commodities and manufactured products has decreased. In contrast, the need for
medical supplies has significantly increased. The food sector has also seen a great demand
due to panic-buying and stockpiling of food products. In response to this global outbreak,
we summarise the socio-economic effects of COVID-19 on individual aspects of the world
economy.
Lockdown Phase 1 (25 March-14 April), Lockdown Phase 2 (15 April – 3 May)
Lockdown Phase 3 (4 May – 17 May), Economic package announcements (12 May - 17 May)
Lockdown Phase 4 (18 May – 31 May) Primary sector
India’s GDP estimates
The GDP growth in 2020-21 is expected to remain in the negative territory. Economic activity in
India was severely impacted by the nationwide lockdown in the last two months. The biggest

2. blow to the economy has come from the slump in private consumption. Consumer durables
production has reduced 33% in the March. Electricity consumption has also plunged. Service
sector has contracted - passenger and commercial vehicle sales, domestic air passenger traffic
and foreign tourist arrivals have slumped in March. However, agriculture sector remained the ray
of hope.
Primary sectors of economy
 Agriculture
Due to logistical problems following the lockdown tea estates were unable to harvest the first
flush. The impact of this on the second flush is not known. The entire Darjeeling tea based tea
industry will see significant fall in revenue. Tea exports could drop up to 8% as a result. From 20
April, under the new lockdown guidelines to reopen the economy and relax the lockdown,
agricultural businesses such as dairy, tea, coffee, and rubber plantations, as well as associated
shops and industries, will reopen.
 Petroleum & Oil
The ongoing measures in India to arrest the spread of Covid-19 has severely dented the
consumption of fuel in the country, with the growth in consumption of petroleum products
falling to an abysmal 0.21 per cent to 213,686 thousand tonne in 2019-20. The growth in India's
petroleum demand last fiscal has been the lowest in at least 10 years. In March 2020 alone
consumption fell 18 per cent to 16,083 Thousand Tonne as compared to the same month a year
ago, fresh data sourced from the oil ministry showed.
Secondary sectors of economy
 Manufacturing
Major companies in India such as Larsen and Toubro, Bharat Forge, UltraTech Cement, Grasim
Industries, the fashion and retail wing of Aditya Birla Group, Tata Motors and Thermax have
temporarily suspended or significantly reduced operations in a number of manufacturing
facilities and factories across the country. iPhone producing companies in India have also
suspended a majority of operations. Nearly all two-wheeler and four-wheeler companies have

3. put a stop to production till further notice. Many companies have decided to remain closed till at
least 31 May. Maharashtra, Hindustan Unilever, ITC and Dabur India have shut manufacturing
facilities except for factories producing essentials. Foxconn and Wistron Corp, iPhone producers,
have suspended production following the 21 days lockdown orders.
Tertiary sectors of economy
 Education
Additionally, concern has been raised about the number of scientific conferences that have been
cancelled or postponed. These conferences are the key to scientific research in many disciplines,
allowing dissemination of research as well as providing networking opportunities for
collaboration and job-seeking. Many conferences have moved online, however these ‘virtual
conferences’ are often not as amenable to networking and a more informal means of scientific
communication.
 Finance Industry
COVID-19 has impacted communities, businesses and organisations globally, inadvertently
affecting the financial markets and the global economy. Uncoordinated governmental responses
and lockdowns have led to a disruption in the supply and demand chain. In addition to the
disruption in the supply chain, the capital market sector has also been affected.
 Healthcare
The COVID-19 pandemic has caused an unprecedented challenge for healthcare systems
worldwide. In particular, the risk to healthcare workers is one of the greatest vulnerabilities of
healthcare systems worldwide. Considering most healthcare workers are unable to work
remotely, strategies including the early deployment of viral testing for asymptomatic and/or
frontline healthcare staff is imperative.
 Pharmaceutical industry
Profound changes to the dynamics of healthcare are likely to ensue, leading to massive
investment into disease prevention infrastructure, and the accelerated digital transformation of

4. healthcare delivery. In the US, active pharmaceutical ingredients are imported largely from India
(18%) and the EU (26%), while China accounts for 13%.
 Hospitality
The hospitality and travel industry have perhaps been most hard-hit, with hourly workers facing
potential devastating hardships.
 Tourism
The tourism sector is currently one of the hardest-hit by the outbreak of COVID-19, with impacts
on both travel supply and demand. Many parks are now closing to further enforce social
distancing as they have in Italy.
 Aviation
The travel industry is grappling with an unprecedented wave of cancellations and a significant
drop in demand amid strict governmental instructions to implement social distancing and the
restriction of unnecessary travel.
 Real estate and housing sector
The real estate industry is facing great uncertainty due to COVID-19. At an individual level
social distancing precautions have reduced house views, a key part of the selling process, and
both buyers and sellers have to reconsider their plans. Increasingly, sellers are looking for
reassurance regarding the health of potential buyers coming to view properties. Some brokers are
offering house tours via Skype and FaceTime to minimise the risk of infection propagation.
 Information Technology, Media, Research & Development
With the WHO raising COVD-19’s status to a pandemic, 35 companies and academic
institutions are racing to develop an effective vaccine. Social distancing precautions are
paramount to the containment effort. Additionally, COVID-19 has left several hospitals in
turmoil, having reached maximal capacity. As a result, various countries are turning towards
technological solutions, to care for patients and at the same time, minimise the risk of person to
person transmission.
 Food Sector

5. The food sector, including food distribution and retailing, has been put under strain as a result of
people panic-buying and stockpiling on food. This has led to increased concerns about shortages
of food products such as long-life milk, pasta, rice and tinned vegetables.
 Sports industry
COVID-19 is having a significant impact on sporting schedules as some of the world’s largest
sporting events come to view in 2020. These are but a few examples; golf, tennis, athletics,
basketball, rugby, cycling, boxing, snooker and ice-skating fixtures have all faced cancellations
and delays in an attempt to curb the spread of disease. Inevitably this will have a significant
financial burden, the gravity of which has yet to come to light.
 E-commerce
In the third week of March, Amazon announced that it would stop sale of non-essential items in
India so that it can focus on essential needs. Amazon has followed the same strategy in Italy and
France. Walmart-owned Flipkart temporarily suspended some of its services on its e-commerce
platform and will only be selling and distributing essentials. BigBasket and Grofers also run
restricted services, facing disruptions in services due to the lockdown. Delhi Police began issuing
delivery agents curfew passes to make it easier for them to keep the supply chain open. E-
commerce companies also look for legal clarity related to what are
"essentials". Swiggy and Zomato will not be allowed to function during this extension period.
 Defence
The Department of Military Affairs led by the Chief of Defence Staff has postponed all capital
acquisitions until the coronavirus pandemic recedes. No new major defense deals will be made in
the beginning of the financial year 2020-21. While the delivery of S-400 missile systems won't
be affected, the delivery of Rafale fighter jets might be.
CONCERN
There are concerns as to where will the government find the funds to fight coronavirus and keep
the economy alive. Experts say the task force will have to look in to NPA norms, tax payments

6. and income support to those in the unorganised sectors. A direct cash transfer scheme for the
most vulnerable is also being considered, as has happened in other countries.
 Economic danger versus health risk
In March, Adar Poonawalla, CEO of Serum Institute of India said that "the economic danger of
the outbreak was exponentially greater than its health risks". On 29 April, Indian billionaire NR
Narayana Murthy said that if the lockdown continues, India may see more death due to hunger
than from the pandemic.
 Supply chains and logistics
Following the lockdown, certain essential supply chains broke down. Although inter-state travel
has been banned, it doesn't apply to essentials, and in places like Maharashtra the state police are
yet to streamline the process, disrupting supply chains. Government allowed the movement of all
essential as well as non-essential goods across the country during the lockdown. The milk and
newspaper supply chains are also allowed to function.
 Salaries
The Prime Minister in March urged businesses and high income segments of society to take care
of the economic needs of all those who provide them services. During the live telecast, he also
appealed to families to not cut the pay of domestic help. Following the lockdown, the
government circulated advisories and directives ordering companies to keep paying employees
among other things. The Ministry of Finance issued an Office Memorandum on 23 March 2020.
wherever such contractual, the casual and outsourced staff of Ministries/Departments and other
organization of Government of India is required to stay at home in view of lockdown order
regarding COVID-19 prevention
 Migrant workers and labour force
Due to the lockdown, daily-wage workers (the urban poor and migrant laborers) were left with
no work. At the same time, the lockdown restrictions put a stop on the movement of buses and
trains. Large numbers of migrant workers ended up walking back to their villages.

7.  Lockdown extension
Following the extension of the lockdown on 14 April, members of the opposition said that there
was no mention of a financial package or any steps whatsoever to revive the economy. Modi
however did talk about a re-calibrated opening of the economy. Telangana was the first state to
extend the lockdown to 7 May, beyond the national lockdown date of 3 May.
 Suspension of Members of Parliament Local Area Development Scheme(MPLADS)
The Modi government, in view of the coronavirus pandemic, suspended MPLADS for two years.
This action has been called problematic in many ways, including causing a centralisation of
power, being anti-federal in nature, and having an affect on local level development and MP
influence at micro levels of the society to handle distress. There have been calls for halting
the US$2.8 billion redevelopment of the central vista project in Delhi instead.
IMPLICATIONS FOR THE AGENDA OF SUSTAINABLE DEVELOPMENT AND
CLIMATE CHANGE
Firstly, the government is likely to enter into the post-COVID period with a still worse fiscal
position than was the case in 2019, when the consolidated fiscal deficit, including central
government, state government, and off-balance sheet borrowings amounted to around 8.5% of
GDP. Fortunately, a number of decarbonisation options are negative cost in India, for example
the transition to renewables in the power sector, where renewables are now cheaper than coal.
Secondly, we can expect substantial financial fragility and reduced risk-appetite in the corporate
sector. This is already evident in the case of the electricity distribution companies, which were
wallowing in debt before the COVID-19 crisis and are now facing a truly dire financial position.
Indian and international investors are likely to be much more wary of allocating capital to risky
new projects, which may slow down the transition in sectors where clean technologies are still
being experimented with.
POST COVID-19 ECONOMIC RECOVERY

8.  Task forces
 State income and expenditure
 Liquor
 Make in India
 Defence
 Re-opening of economy
Conclusion
With fears of a new recession and financial collapse, times like these call for resilient and strong
leadership in healthcare, business, government and wider society. Immediate relief measures
need to be implemented and adjusted for those that may fall through the cracks. Medium and
longer term planning is needed for how the economy is rebalanced and re-energised following
this crisis.