Corona-impact-on-Indian-Economy

Corona virus and it's impact on Indian Economy Abstract 1.India, is the fifth largest economy in the world, cannot be found lagging far behind in taking due rectifying actions in time. The time is then perfectly ripe for RBI to roll out monetary/ fiscal stimulus to protect business from going bankrupt 2.Finance and real estate, with the exception of banking healthcare services was projected to take on a large patrt of the disruption caused by the coronavirus epidemic in India as of March 2020. The overall impact of COVID-19 on the country's economy was estimated to reach nearly 8.8 trillion Indian rupees. Even though GDP forecasts cut growth for the south-Asian country, the large unorganized sectors of the country were said to keep the economy from collapsing. 3.India's GDP growth was cut to 2.5 percent from 4.5 percent for calendar year 2020 due to the estimated impact of the coronavirus (COVID-19). The country went into lockdown upto April 14th, 2020

Cocequences of corona virus and its impact of Indian Economy with international top rating organizations 1.According to Dun & Bradstreet's latest Economy Forecast, the probability of countries entering into recession and companies going bankrupt has increased and India is not likely to \"remain decoupled\" from the global meltdown. India's GDP growth is expected to moderate further from our earlier estimate of 5 per cent for FY20, it said. 2.coronavirus lockdown is causing significant disruption across multiple sectors, including manufacturing, oil, financial, among others, says a report. 3.According to Dun & Bradstreet's latest Economy Forecast, the probability of countries entering into recession and companies going bankrupt has increased and India is not likely to \"remain decoupled\" from the global meltdown. 4.As lockdowns are imposed in other global manufacturing hubs, besides China, the extent of impairment to global supply chain and global growth is likely to increase said 5.On India's economic growth, Singh said, \"given the 21-day lockdown in India, India's GDP growth is expected to moderate further from our earlier estimate of 5 per cent for FY20. And growth for FY21 remained highly uncertain.\" 6.As per the report, lockdowns and restrictions on commercial activities and people gatherings are likely to strongly impact global and domestic growth from March 2020 onwards. 7.Dun & Bradstreet expects the Index of Industrial Production (IIP) to remain subdued by 4-4.5 per cent during February 2020.

In India, GDP growth is already at a decadal low and any further dent in economic output will bring more pain to workers who have seen their wages erode in recent times. Major ratings agencies forecast for India’s GDP growth: 1.Moody’s Ratings Moody’s Investors Service, on March 27, sharply slashed its projection for India’s GDP growth in calendar year 2020 from 5.3% to 2.5%. The markdown was the second in 10 days and came after prime minister Narendra Modi announced the 21-day lockdown. In its Global Macro Outlook 2020-21, Moody’s cited severe liquidity constraints in India’s banking and non-banking sectors as a hinderance to growth. The agency’s forecast for the global economy was even more stark—a contraction of 0.5% in the ongoing financial year. 2.Crisil Rating In a note on March. 26, domestic ratings agency Crisil slashed its base case GDP growth forecast for India in financial year 2021 from 5.7% to 5.2%. It warned that there are further downside risks if the pandemic is not contained by April-June 2020, or if it spreads rapidly in India, affecting domestic consumption, and investment. The pandemic is a threat bigger in scale than the global financial crisis of 2008 as it “not only slams the brakes on economic activity and jeopardises financial stability, but also brings with it enormous human suffering not seen in decades,” Crisil said. 3.Standard & Poor’s Rating

Earlier, global ratings agency S&P had estimated India’s GDP growth for financial year 2021 at 6.5%, which it now expects to fall to 5.2%. In the following year, growth is likely to be 6.9%, compared with 7% estimated earlier. More starkly, it said that a recession across Asia-Pacific is now guaranteed due to disruptions in China. The effect of policy measures aimed at supporting vulnerable sectors and workers will “wane the longer the crisis lasts,” S&P said in a note on March 23. 4.Fitch Rating In its Global Economic Outlook 2020, released on March 20, Fitch Ratings said India’s GDP will grow at 5.1% in financial year 2021. This is a downward revision of its earlier estimate of 5.6%. Besides the Covid-19 pandemic, Fitch also cited risks from the failure of Yes Bank. The financially beleaguered private lender was recently taken over by a consortium led by the State Bank of India under the aegis of the Reserve Bank of India (RBI). “The overall financial system remains burdened with weak balance sheets, which will limit any upside to credit growth despite policymakers’ efforts in recent months to ease stress,” Fitch said. 5.CARE Ratings

Mumbai-based CARE estimates that growth in the January-March 2020 quarter could plummet to 1.5-2.5% “as the usual ramping up of production due in the year end could not be implemented due to the shutdown.” Its earlier forecast was a 4.7% growth in the period. However, the real impact of the 21-day lockdown will be felt in the first quarter of financial year 2021, it said. “With two-thirds of the impact being passed on to the April-June quarter. This can potentially lead to a de-growth in GDP.” Economic impact of Coronavirus: Bad in Jan-March, worse in April-June India is now looking at 4.3 per cent GDP growth for January-March and dropping to maybe 3.9/sub-4 per cent for April-June. The situation is very fluid, these forecasts will keep on changing depending on the sectoral data that we get,”said Aditi Nayar, Principal Economist, Icra Ltd. Economists and experts warn that these assessments and forecasts will change depending on how much the virus spreads and what actions are taken by companies and central and state governments. Unprecedented contraction in investment and manufacturing output in two successive quarters dragged down India’s economic growth to a 27-quarter low of 4.7 per cent in the quarter ended December 2019. Looking ahead, GDP growth is set to stagnate at 4.7 per cent in the March quarter (Q4) too, according to the annual estimate of 5 per cent by the National Statistical Office. Economists believe that there could be surplus in the current account balance in the fourth quarter of FY20. “For January, we are expecting a current account surplus, and for 2019-20 and 2020-21, we are expecting that current account deficit would be limited to $22-24 billion or so,” said Nayar. “Initially when this started, we were more worried about the impact on imports coming in from China into the supply chain. Now it is becoming more of a concern of demand from Europe and United States. There will be a domestic impact from the services sector also,” she added. Analysts say that as far as inflation is concerned, if the petrol and diesel prices don’t come down because of higher excise duties, then there is no reason to expect any major change in the inflation outlook. It is not all grim though. Nayar said that rural demand outlook should now start to look better, and, in the age of e-commerce, there will still be demand for goods. “What we have seen from the February data is that coal mining and electricity generation have shown a double digit growth. So some sectors may have their own kind of outlook. If there is large scale manufacturing shutdown, then the demand for electricity will be on the lower side. 10 Things That Define The Worst March For Indian Markets Indian equity markets are nearly 30 percent off the record high levels they scaled in January. The slide would have been far worse, had it not been for the rally in five out of the last eight sessions. Here are 10 things that defined March for India’s benchmark indices: 1. The Worst March Ever Both the S&P BSE Sensex and the NSE Nifty 50 saw their worst decline ever in March as they tumbled 23 p

2. A Quarter Full Of Volatility January-March saw Nifty 50 tumble 29.3 percent, the worst quarter since 1992. It was the worst ever drop for the Sensex, which tumbled 28.57 percent during the period. 3. A Fall Over 20 Percent It’s not the first such instance when the Sensex and Nifty plunged more than 20 percent in a month. It happened twice earlier, in May 1992 and October 2008.

4. Negative Returns This Year Both the Sensex and Nifty fell in each of the first three months of the year. For Sensex, that happened thrice in the past—2008, 2004 and 1995—and twice for Nifty 50 (2004 and 1995). 5. Worst March For 34 Nifty Stocks A fall as steep as 20 percent cannot take place without a slide in heavyweights. Almost all the Nifty 50 heavyweights recorded their biggest decline ever in March.

6. Nifty Stocks With Worst Quarterly Drop 18 out of the 50 constituents of Nifty 50 saw their worst ever quarterly drop. 7. In Line With Benchmark 27 Nifty 50 fell in each of the first three months of the year, like the

benchmark. 8. The Ones That Stood Out 46 Nifty 50 constituents fell in March. But two FMCG companies and two pharma firms bucked the trend. Three of these four companies - Dr Reddy’s Laboratories Ltd., Hindustan Unilever Ltd.UL and Nestle India Ltd. delivered gains in January-March well. 9. HUL And Nestle The FMCG firms gained in each of the first three months of the year.

10. All Sectoral Indices Decline All other sectoral indices fell in March, led by Nifty media, realty, bank, auto and metal indices. Precautions Need to take for Recovery of Economy 1.To prevent GDP from contracting in the first quarter, there has to be a lot of recouping in “the 10 weeks following the shutdown.” GDP can grow at 3% if there is a recovery of losses and the lockdown ends on April 14. 2.Two factors that have to aggressively drive this recovery are government expenditure and the banking sector which should augment credit to all the sectors. Growth could be lower at 1.5-2% if this does not happen. 3.The measures, implemented on an urgent basis, have the potential to prevent the grave economic crisis that is on the horizon. It is no longer about investors and business. This is about the economic health of the country. 4.March end is the most crucial period for all the companies to knock out the outstanding liabilities and achieve financial closure,\" said Indian Economists 5.The Federation of Indian Chambers of Commerce and Industry (Ficci) said: “There was a strong hope of (economic recovery) in the last quarter of the current fiscal. However, the coronavirus epidemic has made the recovery extremely difficult in the near to medium term.\" 6.As much as 53% of Indian businesses have indicated a marked impact of Covid-19 on business operations, showed a Ficci survey. Around 42% of the respondents said that it could take up to three months for normalcy to return, added the survey.

7.According to CII, GDP could fall below 5% in FY 2021 if policy action is not taken urgently CII said the government should consider providing a strong fiscal stimulus to the extent of 1% of GDP, or ₹2 trillion, to the poor, which would help them financially and also spur consumer demand. 8.Coronavirus impact: Indian industry seeks relief measures to aid economy indian industry has urged the government to provide relief measures in wake of the rapidly spreading Covid-19 pandemic that has derailed the economy. 9.India’s gross domestic product (GDP) growth could fall below 5% in fiscal year 2021 (FY21), if policy action is not taken urgently, according to the Confederation of Indian Industry (CII). 10.Growth in the third quarter (October-December) slowed down to 4.7% and the impact of the Covid-19 outbreak is likely to pull it down further in the fourth quarter, said the industry body. 11.Indian Economists suggested a moratorium for debt servicing that includes principal and interest, reduction of interest rates, and rescheduling of loan repayments. Rating agencies may continue to carry out their surveillance, they should be asked not to downgrade ratings for a while, Indian Economists suggested .