TRADE IN THE WAKE OF COVID 19: AN ECONOMIC VIEWPOINT OF LOCKED DOWN INDIA
Article Contributed by Dr. Arti Sharma, Assistant Professor, Faculty of Commerce and Business Administration.
The coronavirus pandemic is the most challenging crisis the world faces since the Second World War, one that is killing people and will also lead to an economic recession that probably has no parallel in the recent past.
The COVID-19 pandemic has severely brought normal life to an arrest in India. The importance of social distancing and a lockdown in curbing the spread of the virus cannot be stressed enough, but these measures also have huge repercussions on livelihoods and the economy at large, which has already been seeing a slowdown over the past year.
The International Monetary Fund (IMF) says that the 2008 financial crisis comes close, but probably this is much bigger than that. Possibly, one has to go to the times of the Great Depression. Even qualitatively, it’s a very different challenge, because first we have to save lives, then we need to save livelihoods, then we have to meet with other costs like loss of jobs and production, and supply chain disruptions. It’s not just confined to one sector or country; it encompasses the entire economy and the world.
The effect of coronavirus is likely to be seen long after medical science offers a cure or at least a vaccine. Barclays estimates that India’s aggressive 21-day lockdown could bring the country’s growth down to 2.5% from the 4.5% it had earlier estimated.
The depth of the problem that we are going to face is dependent on the length of the period for which we are going to close down and the extent to which the virus spreads. Every country is either already deeply affected or is at the start of being more affected. This is unprecedented in terms of its immediate impact on the lives of individuals from all walks of life. Moreover, India is an economy which relies a great deal on informal employment and MSMEs. So our reliance for people’s well-being on the broader economy performing and the markets performing is high, whatever role the state may try to play.
Source: Confederation of Indian Industry
Source: Confederation of Indian Industry
Due to Corona Crisis, there are some industries which emerged as winners while others as losers and some occupy the status of in between.
Winner Industries:
1) E-Commerce Market Places such as Amazon, JD.Com, etc.
2) Entertainment, Steaming & Gaming such as Net Flix, Amazone Pro, etc.
3) Logistics & Delivery such as Alibaba.com
4) Video Conferencing apps such as Webex, Skype, Zoom, etc.
5) Non Cyclic Businesses such as Essential FMCGs, Pharmaceutical Business, etc
Loser Industries: Airlines, Travel, Cruise, Investment banking, Share markets, tourism, transportation Oil & Gas, Construction, mining, Retail, Employment Services, Professional
Sports, Entertainment & Cinema, Salon, food, Leisure, hospitality, Office Supplies, Gift Stores, Printing, Furniture, Motor Vehicle dealers, Private Equity, Venture Capital, Newspapers, Books, Cement Concrete, Product manufacturing etc.
In Between Industries:
1) Banking
2) Education
3) Healthcare
4) Manufacturing
In-between industries are question marks. Either they can grow and turn out as a winner or they may fall into losers. Post crisis, their progression or recession depends upon one question. i.e. how readily they adopt the new technology & new processes?
References:
• www.thehindu.com
• www.cii.in
• www.timesofindia.indiatimes.com