Sectors in the Indian economy are comprised of varied skilled leveled, which drives the production process. Currently, it has created deep economic distress, many of the companies struggle to keep up the profit levels due to the pandemic. Since the lockdown began at the end of the month of March, the scenario has begun to change with the slow easing of the areas. And the impact of the businesses across sectors will be different according to various experts. The partial lockdown has been put in position by the government, in the month of May. This is said to be a relief for some but the impact on people and the overall economy is still in an unpredictable situation.
Currently as per various estimating parameters close to 32 million jobs are said to be at risk in the economy at present, have been brought about by McKinsey and Company. Since the lockdown is the only way to control the pandemic in the country, the estimates to control the same is close to $130 billion, and the costs are expected to increase if the measure of lockdown is said to be extended. The mentioned figures are said to be estimated the estimates are based on the amount of NPA(nonperforming assets) we have to serve in the current fiscal.
All the sectors in the economy will be impacted by the lockdown. Since the production levels of most of the sectors have not gone in for a full swing, it is still said to be in the minimal production stage. This is to maintain the social -distancing aspect throughout to prevent the spread of the pandemic. All the sectors are said to be very important to the Indian economy since all of them contribute some amount of significant amount in terms of economic growth.
The sectors have taken a major hit, because of low takers of the services, plus the people in need of the services are either denied or not able to procure them due to a lack of manpower.
Medium and small-scale industries (MSME) is said to be one of the most important backbone sectors to contribute to the economy Most of the industries under this are said to be without any major action since the lockdown was announced. Many reports state that there are no funds to run them. Most of the industrial experts are stating that more allocation to the sectors for the purpose of revival. This can be followed by some form of relaxation in terms of the insolvency packages, of which many of the industries are said to be due.
The aviation sector is said to have taken a direct hit due to the pandemic. The travel from all the corners of the country is said to have cut out, so as to control the pandemic. As a result, many of the airline companies have gone in for a complete lay off or in terms of pay cuts so as to sustain in the market. As per the second phase of the lockdown, the effects of the pandemic are said to be much more amplified as per some of the studies. Overall estimates by some of the agencies have estimated that close to 66% of the global interactions are said to be cut off. This is in terms of the flow of passengers and the number of goods coming from the international markets. From a point of complete suspension of travel, recovery is likely to be slow. Demand will be suppressed due to economic dislocation; slow or even negative GDP growth; broken supply chains; low consumer confidence; and concerns about lingering outbreaks of COVID-19, especially if travel insurance companies refuse to provide cover for associated medical expenses or travel disruption costs. All it now needs is some kind of financial aid to support the existing employees.
Real estate in the country is also said to be hit due to the pandemic. We can see the decline in the new purchases in terms of houses, villas, and flats. Most of the builders have resumed their construction process, after being on hold due to several weeks of the lockdown. Many of the employees are said to be the migrant workers and now have gone back to their home towns. this has led to a massive slowdown in the projects. Some of the developers have tried to retain the workers back by promising better wages and facilities to continue the pending projects. Though many parts of the country there is a shortage of labor. KPMG, in its official reports, has stated that the sector is bound to take a massive hit of close to one lakh crore in the current fiscal period. the challenges like subdue demand in the economy and liquidity pressure are going to be the major hurdles for the sector. The credit crunch will lead to residential sales contraction, bringing down sales from 4 lakh units in 2019-20 to 2.8 lakh-3 lakh units in 2020-21 in the major metropolitan cities. Over the next year, the sector will have to revisit its planned developments, expansions, and investments. The structural reforms in the sector will bring in the development of new tech parks, housing complexes, and so on. The sector is going to face multiple challenges in terms of getting back on the growth track.
The manufacturing and distribution of key medicines severely. Many of the countries rely on countries like India and China for the major pharmaceutic ingredients so as to produce drugs for various diseases. However, both regions entered extended periods of lockdown, which has led to a decrease in the levels of drugs in the world.
Many of the manufacturing firms are looking for the shift of the base of production from the United States of America to countries such as ours. This is mainly due to cost-effectiveness and ample manpower supply. Research base companies and establishments have been slowly established in the country to tackle the pandemic. With the increase in the revenue flow from various firms, it is said to have got a hold in terms of conducting trials and research to fight the pandemic. With the help of global partnerships; the global vaccine alliance, GAVI, includes the WHO, governments, pharmaceutical companies, and non-profit organizations such as the Bill & Melinda Gates Foundation. It’s a coalition that has been central to helping India, once the epicenter of polio, rid itself of the virus. Though there is no guarantee of who would be the first to get to the successful vaccine, our doctors and researchers in the field are hands-on decks to strive for the cure.
Solar power industries have taken a major hit, and also being dominated by the Chinese. This is due to the ongoing trends in the country by the majority of the households, to harness the solar energy to power various appliances and reduce the power consumption from the traditional power grid. Many of the companies rely on these products to popularise the clean energy initiatives propagated by the government as well as environmental groups. The Chinese market has come with much cheaper cost materials and modules which has given stiff competition to the Indian markets. Though there have been issues in relation to the quality checks of the Chinese products, the incoming products have reduced and Indian production is yet to take off. To revive the power sector, the government will take steps to privatize power distribution companies in union territories. Inefficiencies of the distribution companies will not be allowed to hurt consumers, as stated by the ministry of finance. This has helped in terms of reducing the transmission loss cost for the private players to 12% as compared to 60% prior to the pandemic.
Automotive sales had seen a major drop in terms of consumption. Though we can see the new platforms been developed in terms of delivery of the vehicles to the customers, the major customer base has not been tuned to the recent changes. The changes would take time to adapt to the changes.
Tourism has also taken a major hit due to these pandemic times. With the reduction in terms of the tourists. Most of the domestic as well as international flights have been called off by the pandemic. So, this way the pandemic has affected the sector a big way. The jobs in the sector are said to be at a stake. In terms of the GDP contribution, it is close to 10% and in terms of the jobs, it accounts for 50 million. This is going to account for all the workers such as travel operators, travel agents, restaurants, and many more. The trend at present, is people are afraid in terms of traveling abroad. This has cost a lot to both the airline as well as the sea cruise industry. Now the fact, of operating costs will increase post the lockdown, in terms of the increased sanitation drives so as to maintain the hygiene. The sanitation levels would be given more by travelers. People will become choosy in terms of choosing the destinations, making the tour operators, more competitive in terms of giving the best prices for the tour packages. It is going to be a challenge for the sector. The government has gone in terms of a staggered approach in terms of the revival of the sector. Part of the demands in the sector is in terms of the reduced tax slabs, demand for a moratorium in terms of paying off the existing loans, tax waiver for the cab services, and so on. All this along with some promotional drives for the promotion of the sector is being asked for by the states so as to generate back the revenue.
Textile industries have also been hit. Many of the spinning mills have been shut due to a lack of labor in the mills. Due to the lockdown, the revenues of the industries have said to have dipped to a great deal. It has also delayed in terms of the payment of the dues as well as of the annual interests to the financial institutions.
The sector accounts for 15% of the total exports in the country and provides employment to close to 45 million workers across the country. The pandemic has affected the majority of India’s export market (the US and EU together constitute for approximately, 60% of the total apparel exports from India in value terms), causing order cancellations/deferral of order leading to inventory build-up and expectation of slower realization of export receivables leading to higher working capital requirements. Additionally, domestic consumption is also getting impacted due to the lockdown. New store openings have stopped and even domestic stores are facing an inventory build-up due to apparel sources. Further, domestic prices could be negatively impacted if exporters dump their inventories in the domestic market leading to even reduced margins. This could lead to short term glitches in terms of reduced employment of casual labor ( and reduced consumption. There is also an issue of cash flow constrain for the sector due to reduced exports. The sector hopes for a serious consideration for the sector since it is highly manpower driven and risk of an imminent collapse.
A sector that is said to be the backbone of the Indian economy, the sector is also being impacted a great deal in terms of the levels of trade across the globe. In terms of the levels of exports, the levels are said to have reduced, so as to cater to the needs of the economy of the country during the pandemic crisis. The prime minister had mentioned more importance of the mandi system or otherwise known as the village grain houses to control the levels of buying and selling activities. This is basically to bring in better integration to the Indian economy The need to implement the scientific measures of farming so as to contain the levels of losses. This is said to be important as the country can't afford to lose crops especially in a situation as precarious as the present pandemic. The use of E-Nam application, the farmers' can strike deals for their harvests remotely by first uploading pictures of their samples and then getting these samples scientifically checked for quality by remote assayers, without having to move entire truckloads to physical markets. The e-NAM platform now has a total of 785 markets online. The government is considering a “single mandi tax for the country” and “removal of levies” charged to traders and farmers when farm goods are sold from one state to another, known as interstate mandi tax. Over, the course of the year many of the reforms would be brought in so to bring some security to the sector. This is said to be the priority sector of the government so as to ensure food security to all its fellow citizens.
From the mentioned facts and figures all must have come to the sense of how the pandemic must have seen the impact on the economy. The only way to go about this is some kind of relief packages, which would nudge the economy back to the normal phase of production. The government has come up with some packages to ensure some kind of security for the people of our country.
The government has come up with close to 1.70 lakh crore, in the month of April, in terms of relief to the poor and vulnerable sections of the country. Part of it is been sent in terms of beneficiaries and in terms of cash transfers. The government has released an LPG, free food grains, and relief-transfers for the poor worth Rs.57000/- crores. There is also some kind of relaxation from the provident funds as well. Cash handouts to the farmers have been carried out via the PM Kissan scheme. About 7.47 crore of the eight crore farmers has received Rs 2,000 each as on April 10. This involved a total cash outgo of Rs 14,946 crore for the government and is part of the existing scheme.
The prime minister has formed a committee so as to look into the issues of the sectors of the economy. Its been constituted by a seven-member committee along with the economic affairs secretary, who would be overseeing the situation of the Indian economy.
The comprehensive package is supposed to energize the economy in terms of generating the demand levels of the economy. It is also said to increase the levels of accelerating the levels of public works in the country.
As on May 12th, 2020, the prime minister of the nation has announced an Rs. 20 lakh crore stimulus packages so as to restart the economy. It is said to account for 10 percent of the GDP, highest in terms of the relief packages introduced among the nations across the globe. Special packages will be for the farmers, MSME sectors, and cottage industries. The cost of the package is close to an estimated 10% of the current GDP of the country. The focus of the growth will be technologically driven so as to meet the demands of the growing economy. The focus of the government is also to develop the indigenous brands and the products in the economy so as to promote the growth of the economy and promotion of the growth of the nation. With these relief measures taken, it’s a matter of time that the country takes progressive and cautious steps to revive the economy as well as promote healthy growth trends in the Indian economy.