The COVID-19 pandemic has had a significant
impact on the Indian economy. The government implemented several measures to
curb the spread of the virus, including nationwide lockdowns, which resulted in
a sharp decline in economic activity.
One of the major impacts of the pandemic on
the Indian economy has been the loss of jobs and income. The lockdowns and
restrictions on movement led to widespread unemployment, particularly in the
informal sector. This has resulted in a decline in household income and a rise
in poverty levels.
The pandemic has also disrupted supply
chains, leading to shortages of essential goods and services. This has led to a
rise in prices and inflation, making it difficult for people to afford basic
necessities.
Before COVID-19:
India's GDP growth rate was already slowing
down before the pandemic hit. According to the Ministry of Statistics and
Programme Implementation, India's GDP growth rate was 4.5% in Q2 2019 and 4.4%
in Q3 2019, the slowest in over six years. The slowdown was attributed to
various factors such as a slump in consumer demand, weak investments, and a
liquidity crunch in the financial sector.
Newspaper editorial: A Times of India
editorial published on November 30, 2019, titled "India's GDP growth rate
slows, time for action," stated that the GDP growth rate slowdown was a
"wake-up call" for the government and called for urgent action to
revive the economy.
After COVID-19:
India's GDP contracted by 7.7% in FY
2020-21, the worst performance in four decades, due to the impact of the
COVID-19 pandemic. The contraction was attributed to the lockdowns and
restrictions on movement that severely impacted economic activity, particularly
in the informal sector. However, the economy has started to recover, with a growth
rate of 1.6% in Q4 2020-21.
According to The Hindu stated that while the economy has shown signs of recovery, the challenges of unemployment, inflation, and structural reforms still remain.
Here is a graph that shows India's GDP growth rate before and after the COVID-19 pandemic:
The data shows the severe impact that the COVID-19 pandemic had on India's GDP, leading to a significant contraction in economic activity. While the economy has started to recover, the growth rate is still significantly below pre-pandemic levels.
Unemployment
Before COVID-19:
According to the Centre for Monitoring Indian Economy (CMIE), India's unemployment rate was 7.5% in February 2019, which increased to 7.8% in March 2019. The unemployment rate had been gradually increasing in the months leading up to the pandemic due to the economic slowdown.
During pandemic The unemployment rate in
India rose sharply with some estimates
suggesting that over 100 million jobs were lost in 2020. The Centre for
Monitoring Indian Economy (CMIE) reported that the unemployment rate reached a
peak of 23.5% in April 2020 due to nationwide lockdown. and the subsequent
impact on economic activity. The unemployment rate gradually declined in the
following months, but it remained above pre-pandemic levels, reaching 8.00% in
December 2021.
Here is a graph that shows India's monthly unemployment rate before and after the COVID-19 pandemic:
Before the pandemic, India's inflation rate
was relatively stable, with the Consumer Price Index (CPI) hovering around 5%.
However, the pandemic caused disruptions in the supply chain, leading to a rise
in food prices and fuel prices. As a result, the CPI increased to nearly 7% in
2020. However, with the easing of lockdown restrictions and increased supply,
inflation has been brought under control and is currently hovering around 5.5%.
Fiscal Deficit:
The pandemic led to a significant increase
in India's fiscal deficit. The government had to increase spending to provide
relief to people and businesses affected by the pandemic. In the fiscal year
2020-21, the fiscal deficit was 9.5% of GDP, up from the budgeted 3.5%.
However, the government has taken steps to bring the fiscal deficit under
control, and it is expected to be around 6.8% in the current fiscal year.
Manufacturing:
The pandemic had a severe impact on India's
manufacturing sector. With factories shutting down and disruptions in the
supply chain, manufacturing output declined significantly in 2020. However,
with the easing of lockdown restrictions and increased demand, manufacturing activity
has picked up, and output has increased in recent months. The manufacturing
Purchasing Managers' Index (PMI) for March 2021 was 55.4, indicating expansion
in the sector.
Services:
The services sector, which accounts for a
significant share of India's GDP, was severely impacted by the pandemic. With
restrictions on travel and movement, sectors such as hospitality, tourism, and
aviation were hit hard. However, with the easing of restrictions, the services
sector has started to recover. The services PMI for March 2021 was 54.6,
indicating growth in the sector.
Overall, the COVID-19 pandemic has had a
significant impact on the Indian economy, with a decline in GDP growth, a rise
in unemployment, and disruptions in various sectors. The government has
implemented several measures to mitigate the impact of the pandemic, but the
full extent of the economic impact is still uncertain, and the recovery may
take some time.
