NAME AMIT S.

SHENDE

ROLL NO. BT16CIV007

SUBJECT PRINCIPLES OF ECONOMIC

HOW COVIDE-19 HAS IMPACTED THE ECONOMY OF
INDIA AND THE WORDL ? WHAT COULD BE DONE
BY PUBLIC AS WELL AS PUBLIC SECTOR TO
IMPROVE THE ECONOMY ?

OUTLINE
1. INTRODUCTION
2. IMPACT OF COVIDE 19 ON ECONOMY OF INDIA AND WORLD
3. MEASURES TAKEN BY PUBLIC AND PRIVATE SECTOR
4. CONCLUSION

1. INTRODUCTION

In December 2019 number of pneumonia cases in Wuhan, a city

in Eastern China was identified. It is started first at sea food
market of Wuhan city.A team of virologist at Wuhan Institute
for virology released a paper that shows genetic sequence of
corona virus is 96% similar to that of corona virus found in bats
while the other study suggest (published on 26 March ) suggest
genetic sequence of corona virus in pangolins are between 88.5
to 92.4
On 30 January The World Health Organization (WHO )
declared corona virus as Public Health Emergency of
international concern.
Corona virus is not a single virus it is group of viruses that
causes disease both human and animal. SARS-Cov is an
example of corona virus SARS ( severe acute respiratory
syndrome ) spread rapidly in 2002- 2003. An about 80% of
covide-19 people recover without any specialist treatment these
people may experience mild flue like symptoms, however 1 in 6
people experienced sever symptoms such as trouble in
breathing.When people with covide-19 breath out or cough they
expel tiny droplets of water that contain virus that can enter
through the mouth, nose and eye and cause infection or corona
disease in other person, study suggest that people with
respiratory problems have sever effect of this virus and about
10% are from people exhibiting no symptoms.droplets
containing the virus can also land on nearby surface or object
,and other people can get affected by this by touching this
surfaces or objects and the he touches his nose, eye or mouth.

Corona virus rapidly spread in the world and it becomes

pandemic and it impacted India economy as well as world
economy and become a reason for world recession and put many
problems in front of the world.At today time Public as well as
private sector need to take some steps that will reudce impact on
economy.Many countries in the world facing lockdown due to
which economic activities reduces drastically for the control of
spread of this disease.

These situation raise a question like will businesses will reopen

and jobs come back ? Will the flood of money from the
government and the central bank ( Reserve bank of India )
sufficient to prevent deep and lasting recession, or worse ?
For India it has recent experience of demonetisation and now
this pandemic we can surely say that it will largely impact on
our economy as our economy is also depends on
exports,tourism and other service sector.But also in this
situation technology the internet and telecommunication that are
enabling people to be work around the globe without comprising
with their health but lot of our economy depend on offline.
By seeing this short introduction of covide-19 we are now
capable to understand how this spread and effects the life of
people and how world economy and India economy is/will face
problems and impact will see on next point.

2. IMPACT OF COVIDE 19 ON ECONOMY OF INDIA AND

WORLD

Covide-19 already affected the main driver of economy off

world US and Europe ,China,Japan and India also it does look
like that economic growth in this region 1% from the 2.25%
expected earlier affecting the global output and trade in both
good and services and 1/3 of economic losses will be direct
cost : lost of life, workplace closure and quarantines and the
remaining two third will be indirect, reflecting a retrenchment in
consumer confidence and business behaviour and tightening in
financial markets.Demand of product and service will suffer as
consumer will cut down its spending throughout the year and
study also suggest that 2020 will be higher corporate layoffs and
bankruptcies throughout 2020, feeding a self reinforcing
downward spiral. Financial system will also suffer significant
distress, but a full scale banking crisis most likely will be
averted because of strong capitalization and micro prudential
now in place yet our fiscal and monetary policy responses may
prove insufficient to break the downward spiral.Global economy
impact due to this situation is severe and can exceed the 2008
crisis on scale.
Many businessman hoping a v-shaped economy means sharp
decline and sharp recovery but there is caveat we can face
prolonged slowdown, driven by longer phase of restriction as for
the normalcy purpose government will gonna keep restriction
for longer time.

Also we are come to know or some study is suggesting that

corona virus could potentially come back again in community
then if this happen relaxed restriction will be end again and
government will impose till the vaccine is developed, then
economic impact will last nearly 12-18 month which is earliest
time frame for a potential vaccine.

If we will talk about the sector level then tourism and travel
agencies or related industries will be among the hardest hit and
also social forms of consuming art entertainment/ art/ culture.
International Air Transport Association tells that covide-19
could cost global air carrier between $63 billion and $113
billion in revenue in 2020, and international film market could
loss over lose $5 in lower box office sale but internet
connectivity is proving backbone on which we are consuming
content on website like you-tube and online streaming website
like Netflix, Amazon
Even before the corona virus crisis Global Economy had been
faced challenges with total global debt reaching $188 at the end
of 2018 says director general and CEO at Federation of Indian
Exports organization ( FIEO ) “ we are already seeing
disruption in global trade ,global economy and Indian
exports as per rough estimate 30 percent of order have been
put on hold and we expect that 50 percent of that may not
materialise subsequently”.
For labour intensive sector situation is extremely bad as they
heavily depends on exports to advanced economies of Europe
and North America and these both are going in tough situation.
Leather,footwear,handicraft,apparel……countless worker and
specialised artisans dependant on it.

In first lockdown order 75 district already covered production

hub like Mumbai, Chennai, Varanasi, Ludhiana but when our
prime minister Narendra Modi announce on 24 march “every
state, every village will be under lockdown” ffor 21 days those
were words that could affect lifetimes.This will largely MSME (
Micro, Small, and Medium Enterprises ) they will be burdened
by fixed cost without business that will put lot of pressure on
them, a tough aspect is that they are supposed to pay wages to
workers, otherwise worker will be in trouble but whether they
have sufficient liquidity to sail through this crisis.
Due to the closed railway station thousands of worker comes on
road to go their home but none of they of proper protective
equipment, marching to far villages, potentially spreading the
virus deep into countryside.

IMF ( International Monetary Fund ) paper shows that growth

declined will be very sharp, with a huge rise in global
unemployment at almost 9% rate mostly in the informal sector
across globe and in the developing countries like India.
Things will be more desperate for small entrepreneur, daily
wager,self employed carpenters,plumber car mechanic,and small
shop that would have been buzzing.
The biggest challenge will for
aviation,tourism,shipping,hotel,restaurants,travel agencies
and also in manufacturing sector supply chains, especially for
auto, electronics, chemical, metal, engineering will be affected
for sure.First it will affect the service sector and then gradually
it will move to the manufacturing sector.
The data of Dun & Bradstreet show that around 6606 companies
have their business linkage with countries that have large
number of active corona virus cases and business activity of
these country is slow will have negative impact on this
companies.According to the world bank assessment India GDP (
Gross domestic Product ) will grow 1.5 to 2.8 percentage and
according to the IMF ( international Monetary Fund ) India’s
GDP will grow at 1.9 percentage, the worst recession since the
great depression in the 1930s due to Covide-19 global
pandemic.According to KPMG due to the lockdown there will
be impact on consumption which is biggest component of our
GDP ,will have sizable impact on our economy

Consumption of non essential goods will reduce drastically due

to less urban transaction and will lead to steep fall and due to
this weak domestic consumption and consumer sentiment can be
delay in investment that will lead stress on growth but one
advantages we can not ignore that after this pandemic company
will change their strategies and can shift their manufacturing
bases from china and this will be great opportunities for India
and this opportunity mainly depends on how fast our economy
recover and pace with which supply chain issues will be
addressed.
CEO and chairman of KPMG India said that “ apart from
providing robust safety nets for vulnerable , a focus on ensuring
job continuity and job creation will be imperative and there is
urgent need to mobilise resources to stimulate the economy for
increased demand and employment”.And also recovery of
economy of India compare to the other countries will be more
reliable and at faster rate
IMPACT IN TERMS OF
(1) IN TERMS OF TRADE

China is the world’s largest exporter and second largest importer

It accounts for 13 % of world exports and 11% of world
imports. In imports India’s dependency on China is huge the top
20 product that India import from the world in this china’s share
is huge.Around 45% of electronics product we import from
china one third of machinery and two fifth of organic chemicals
that India purchase from the world are imports from the China.
More than 25% share of automotive parts and fertilisers of
China.Around 65 to 75 % of active Pharmaceutical ingredients
and around 90% of certain mobile phone come from China to
India.
By seeing current pandemic we can surely said that this will
affect on Indian exports.

(2) IN TERMS OF EXPORTS

Most of the Indian companies are located in the eastern part of

china and cities like Beijing, Shanghai, provinces of Guangdong
,Shandong,Jiangsu and these companies work in various sector
like IT and Chemical,Logistics,Airline,tourism and industrial
manufacturing,manufacturing service and if this companies
economy can affect our economy.
China is India’s 3rd largest export partner and accounts for
around 5% share. Impact can be seen in following sector
chemicals,plastic,fish product,cotton,ores,organic chemicals.
Upstream and downstream oil companies will face lower global
demand that will affect the commodity price and according to
the CLSI report chemical, pharma,electronics business will face
supply chain problem that can increase the prices up by 10%

SECTOR WISE IMPACT ON INDIAN INDUSTRY

(1) CHEMICAL INDUSTRY:

Due to corona virus chemical pants have been shut down in
china and there are restriction on shipment/logistics and due to
this 20% of the production has been impacted and disruption in
material supply.China is major supplier of indigo that is required
for denim production due to this Business in India is get
affected.

(2) SHIPPING INDUSTRY

As per report per day per vessel has declined by more than 75-
80% in dry bulk trade and business of cargo movement service
provider affected drastically.

(3) AUTO INDUSTRY

Due to lockdown auto industry shut their production as there is
no labour for the production and manufacturing and demand
will drastically declined due to consumer demand and there is
also challenges to take health care of worker so most of this
sector is shut down.

(4) SOLAR POWER SECTOR

Shortfall of raw material like panel/cells and closed business
and limited stock from the other countries Indian developer is
facing problems.

(5) TEXTILES INDUSTRIES

Due to the corona virus garments/textile companies in India
halted operation that is affecting the exports of fabric, Yarn, and
other raw material.

(6) PHARMACEUTICALS INDUSTRY

Despite being one of the top formulations of drug exporters in
the world, the pharma industries of India relies heavily on
imports as bulk of drugs.Due to the corona virus outbreak and
nation wide lockdown for a such long time will affect this
industries.
This is data from India Today News Report
Estimated loss ( all data in Indian rupees )
1. Automobile sector = 2300 CR per day
2. Restaurants = 1,00,000 CR
3. Real estate sector = 30,000 CR per day
4. Aviation = 25,000 CR
5. Tourism sector = 10,00,000 CR
6. Country unemployment rate
FEB 2020 = 7.78%
MARCH 2020 =8.74%
APRIL 2020 = 23.52%
MAY 2020 = 27.1%

India’s GDP ( Mood’s ) Fitch ratings

Earlier estimate = 2.5% earlier estimate = 5.1%
Forecast = 0.2% FY21 Forecast = 2%

3. MEASURES TO BE TAEN BY PUBLIC AND

PRIVATE SECTOR
Below some are suggestion and step taken by public and private
sector to improve economy
1. To prevent global economy series of dedicated policy and
and institutional reforms are needed to prevent health of the
people
2. Government need to be spend and give reliefs to sector such
lie taxes cut, help
(a) Government can reduce interest rate and tax cut so that
economy could be better
(b) In America this is an election year and they already plan to
cut tax rates and launch many scheme for their citizen same or
such types of scheme can be also used in India
(c) Chinese Government is likely to introduce significant
expansionary measures
– shorthand for increasing spending or tax cuts

(3) Cash reserve ratio of bank should be decreased

(4) Loan taken by the people can be freeze so that it will not put
extra burden on them and when situation will become normal
they can start their work without extra stress
(5) Support to the corporate borrower and as well as rural
industry from the government side
(6) Ease of doing business should be improve so that it can
attract companies to come in India and so business that will
better off our economy.
(7) Sovereign bond and Rupee the Reserve Bank of India should
inject additional liquidity in the banking system to keep down
bond yield.
(8) Invite foreign companies to do business in India
(9) Shorter trading hour
(10) For capital market give 45 days additional to the company
to submit their quarterly and annual result and should be eased
rule to fast tracks right issues, and also extend the validity of it’s
observation on public issue by appropriate time from the date of
expiry to help companies raise fund amid the covide-19
pandemic.
(11) Lockdown should be eased to begin economic activities.
(12) Such step should be taken so that more number of jobs will
be available after the pandemic as per the news given by india
today we can see that unemployment rate in may is 27.1%
(13) More incentive scheme should be launched such as
government launch productivity linked incentive scheme for
mobile phone and its part surely this type off scheme can attract
companies.
(14) Medium and small entrepreneur weakened due to this
lockdown proper step should be taken.
(15) Large firms or private sector can give fund to the small
supplier.They usually can raise money in bond market and pass
it on.
(16) Government PSU and agencies should pay their bill at
national and as well as state level immediately, so that private
firms will have valuable liquidity.
(17) Government must loose it’s fiscal restrain so that our
economy will be stabilize,grow,and recover
(18) Provide working capital at low interest rate to small and
medium enterprise and start-ups and once this pandemic is
controlled government should invest in infrastructure this is the
most direct and fastest way to create job.
(19) Provide wage subsidies to business directly to worker in
through digital payment and this gonna ensure workforce record
and register and in future it will gonna assist business to retain
worker at a time of stressed cash flow.
(20) Consistent and implementable labour code should be there
that is good for business and worker and as well as for worker.

These are the suggestion that can public and private sector can
do to improve economy several decision is already taken by the
government let’s us look these that will help us to make
economic situation better

(A) Income Tax

(i)For the year 2018-2019 the last date of income tax return
extended from 31.03.2020 to 30.06.2020
(ii)Aadhaar -Pan linking date extended from 31.03.2020 to
30.06.2020
(iii) Due dates for issue of notice,approval order,sanction
order,intimation,notification,filling of
appeal,statements,furnishing of return,application,report,any
other document and time limit for the completion of proceeding
by the authority and any compliance by the tax paper including
investment in saving instrument or investment for roll over
benefit of capital gain under income tax act, wealth tax act,
prohibition of Benami property transaction act, Black money
act, STT law, CTT law, levy law, Vivad se Vishwas law,
Equalization Levy Law date extended from 20.03.2020 to
30.06.2020
(iv) Regular tax, TDS, TCS, STT,CTT, self assessment
tax,delay payment of advanced tax made between 20.03.2020 to
30.06.2020 reduced interest rate 9% from 12 to 18% per annum
it means 0.75% instead of 1/1.5 % per month will be charged for
this periode no late fee/penalty shall be charge for delay relating
to this period.

STEP TAKEN BY RESERVE BANK OF INDIA

On 27.03.2020 reserve bank of India announced a regulatory
package to mitigate the burden of debt to ensure the continuity
of viable business
(i) All commercial bank that include regional rural bank, small
finance bank, local housing finance company and lending
institute given three month of moratorium for all installment
falling between 01.03.2020 to 31.05.2020 . Repayment schedule
for such loan as also residual tenor , shifted by three month after
the moratorium period. During the moratorium period interest
will accrue on outstanding portion of terms loan.
(ii) Working capital facility sanctioned in the forms of cash
credit/over draft (CC/OD) lending institute can defer the
recovery of interest applied for all such facilities from
01.03.2020 to 31.05.2020. After completion of this period
accumulated accrued interest can be recovered.
(iii) Working capital facility sanctioned in the form of CC/OD to
borrower facing stress due to this economic fallout of the
pandemic, lending institute may recalculate the drawing power
by reducing the margin and/ or by reassessing the working
capital cycle.
(iv) If exposure of lending institute to borrower is more than 5
crore as on 01.03.2020 then bank will develop and MIS on the
relief provide to its borrower which will include borrower wise
and credit facility wise information regarding the nature of
amount and amount of relief granted.
(B) CORPORATE AFFAIRS
Corporate sector plays an important role in economy as a
large portion of tax is given by the corporate due ensure their
stress due to this global pandemic some relaxation are given to
them which will help to made our economy on track
(i)During moratorium period from 01.04.2020 to 30.09.2020 no
additional fees will be charged in respect of any document,
return, statement, etc., required to be filled MCA-21 registry,
irrespective of its due date.
(ii)The mandatory requirement of holding meeting of the board
of the companies within prescribed interval provided in the
Companies Act 2013 extended by a period of 60 days till next
two quarter till 30.09.2020.
(iii) Applicability of companies ( Auditor report ) Order, 2020
shall has been deferred by a year to financial year 2020-2021.
(iv) Requirement to create a deposit reserve of 20% of
deposits maturing during the financial year 2020-21 before
30.04.2020 shall be allowed to be complied till 30.06.2020.
(v) Newly incorporated companies required to file declaration
for commencement of business within 6 month of incorporation
this period extended 6 month more.
(vi) As per schedule 4 to the Companies Act, 2013
Independent directer are required to hold at least one meeting
without the attendance of Nonindependent directors and
member of management for the year 2019-20, even if the IDs of
a company have not been able to hold even one meeting, same
shall not be viewed as violation
(vii) Due to this global pandemic most companies on account
off the large scale companies distress so threshold of default
under the IBC 2016 raise to 1 crore from the existing threshold
of Rs 1 lakh.

(C) GST/INDIRECT TAX

(i) Those having aggregate annual turnover less than Rs. 5

Crore can file GSTR-3B due in March, April and May 2020
by the last week of June, 2020, without any interest, late fee,
and penalty.

Others can file their returns due in March, April and May 2020
by last week of June 2020 but the same would attract reduced
rate of interest @9 % per annum from 15 days after due date.
However, no late fee and penalty shall be charged, if the
compliance is made before 30.06.2020.
 (ii)Date for filing GST annual returns of financial year 2018-
2019, which is due on 31.03.2020 has been extended till the
last week of June 2020.

(iii) Due date for issue of notice, notification, approval order,

sanction order, filing of appeal, furnishing of return,
statements, applications, reports, any other documents, time
limit for any compliance under the GST laws where the time
limit is expiring between 20.03.2020 to 29.06.2020 shall be
extended to 30.06.2020.

(iv) Payment date under Sabka Vishwas Scheme shall be

extended to 30.06.2020. Further no interest shall be charged
if the payment is made by 30.06.2020.

(D) FINANCIAL SERVICE

(i) Relaxations have been provided for 3 months to the debit

cardholders to withdraw cash for free from any other banks'
ATM for 3 months, along with waiver of minimum balance
fee, reduced bank charges for digital trade transactions for all
trade finance consumers.

(4) CONCLUSION

In the month of February most of the global business is in loss

as Covide-19 confirmed in China as it plays an major role in the
global as well as Indian Economy.To control Covide-19 china
restrict travel and factory were shutdown slowly this epidemic
in China become Pandemic for world and most of large
economy shutdown and lockdown were imposed to control this
pandemic.Travel ban for airline, tourism and hospitality
industries cause distress situation. In the commodity market
crude oil prices falls to lowest equity market suffer major losses
but in this gold prices, US Dollar, fixed income assets - mainly
government debt gained ground due to the safe haven demand .
Lockdown were imposed and in India it is lockdown 4.0 to
control the situation but restriction to the business activity cause
great loss to the economy by considering this Central
government as well as state government have announced certain
relaxations from time to time in order to restart economic
operation and particularly for agriculture, health care small
mohalla shops that sells electric fans, books, service by
electrician, plumber or water purifier etc. And slowly planning
for domestic airline and travel.

Due to this pandemic Indian Economy will wreck and the level
of GDP may further fall, more so when India is not immune to
the global recession.Before the covde-19 Indian economy
already ailing deep seated slowdown for several quarter and this
pandemic is not good for economy.

To tackle this situation public sector as well as private sector

should come forward and give their best to improve global
economy. In India Prime Minister Narendra Modi already spoke
about the setting the an Economic task force to devise policy
measure to tackle the economic challenge arising from the this
global pandemic of corona virus, however we need to set the
concrete plan for support the economy and its recovery.Many
step already taken to tackle this economy as this situation badly
affect the Medium and Small enterprise Prime Minister
Narendra Modi announced a package of 20 lakh crore that is
subdivided in various sector and step taken for corporate sector,
relaxation of tax, income tax, Property tax already discussed
above which is step to improve the economy, Reserve Bank of
India also taken many step such as reduced repo rate, will gonna
ensure liquidity.

As disruption progress globally as well as India, it is for us to

forget, atleast for the time being, all talking about economic
recovery, and instead join hands whole heartedly to tackle the
outcome of corona virus.