When the Coronavirus or Covid- 19 was in its initial stage, nobody would have thought of it spreading globally. Nobody would predict the virus will be responsible for the economy halts around the world. Major industries in India and around the world have suffered significant losses due to it.
The question is how different sectors of the Indian economy are effect. And post lockdown What will happen? Therefore, in this blog post, we will cover various industries such as tourism, Healthcare, Food, and Agriculture, and many more to understand the impact post lockdown. The effects parameters are low, medium, and high.
Currently, there are three scenarios, which can explain the effect on the economy.
- By the end of April- May, we will see a quick retraction. The growth rate will be between 5.3%-5.7percent.
- While the Indian economy will be able to recover, however, the world economy falls in a recession. In this scenario, the growth rate is between 4%-4.5percent.
- If the lockdown is extended, The Indian and world economy both goes into recession. The growth rate falls to below 3%.
Now, let’s check out the effect on different sectors. The parameters use to predict are price variations of primary raw material, Cash Flow Constraints, Supply chain disruptions, consumer sentiment, Exports, and other parameters.
Impact of COVID-19 on Apparel and Textiles
- Apparel and textile share 2% of the Indian GDP.
- It employs more than 45 million direct jobs.
- Over the next few quarters, the expected demand will fall by 5% to 10%.
- The production is also expected to fall by 10% to 12% in April- June Quarter.
The sub-sectors, which expects to fall majorly, are Yarn, Home Textiles, Apparel, and Man-Made fiber.
Impact of Covid-19 on Different Sectors post lockdown
Impact of COVID-19 on Auto and Auto Components
- The automobile sector shares 7.1%, and Auto Components share 2.3% of the Indian GDP.
- It employs around 40 million jobs.
- The passenger vehicle segment demand is likely to low.
- The Commercial vehicle segment demand is also likely to plummet.
Impact of COVID-19 on Aviation and tourism
- The Aviation sector contributes $72 billion to India’s GDP.
- It employs about 8 Million Jobs.
- The tourism sector shares 9.2% of the Indian GDP.
- It supports more than 42 million people.
- According to the International Air Transport Association, The passenger revenue loss will be more than $250 Billion in FY21. Since Indian is the fourth largest aviation market, it will witness massive losses.
- The tourism sector is set to lose around 4-5 Crore jobs and an overall loss of Rs 5 Lakh Crore.
Impact of COVID-19 on Building and construction
- The real estate sector is one of the largest areas to generate employment.
- By 2025, real estate will contribute 13% to the Indian GDP.
- The housing sector is likely seen losses.
- The REIT launches is likely to postpone.
- The overall loss in the real estate is likely to be projected at Rs 1 Lakh Crore.
Impact of COVID-19 on Chemicals and petrochemicals
- India is the sixth-largest Chemical and Petrochemicals producer in the world. It contributes around 3.5% to the global Chemical industry.
- The domestic production is approximately 27 MMT.
- The Raw material, Production, Cash flow, price end products are likely to affect profoundly. However, the labor force and supply chain will be affected medium. Exports will be the least affected.
Impact of COVID-19 on Consumer, Retail and Internet Business
- The retail sector contributes around 10% to the India GDP.
- The retails sector shares 8% of the employment.
- The segments are household and personal care with 50%, healthcare with 31%, and food & beverages with 19%.
- The E-Commerce market size in India is $64 billion.
- FMCG companies may look at a hike in selling due to consumer intention to overstock the essential products.
- For players in Essential commodities, there is expected growth.
- The products, supply chain, are least to be effected.
- The price of raw materials, cash flow, and labor force export are going to be profoundly affected.
Impact of COVID-19 on Education and Skilling
- The Education market size is $101.1 billion.
- The workforce in the 15 to 59 years is 13.57%.
- Under Skill India Misson, More than 3.4 million people were enrolled and skilled.
- It had created jobs in an urban and rural area of more than 26 million.
- Post Coronavirus, Many job roles are likely to change. Hence the skill institutions need to be ready for the impact and change accordingly.
- Ed-Tech, Simulation-based platforms are likely to rise.
- Schools around the country are closes during the crucial period.
- Online education has seen substantial growth.
Impact of COVID-19 on Financial Services- NBFCs and Banking
- Banks' profit are likely to low for a short period.
- The transactions will be low due to low cross border trade.
- The wealth product fee income are likely to fall.
- The defaults and insolvencies carry a high risk in the retail sector and corporate sector.
- There is uncertainty in the credit loss in portfolios.
- Health insurance and life insurance is likely to witness growth, respectively, 18% and 16%.
- Renewals of insurance will get delayed, hence low numbers of renovations.
- There will be a dramatic fall in Equity prices.
- Post Covid-19, financial companies will present accelerated product approvals,
Impact of COVID-19 on Food and Agriculture
- The Food sector shares 16.5% of the GVA and 43% of the employment.
- The Market size of the food and retail market is $828.92 billion. The food processing market size is $543 billion.
- The primary food segments are Dairy (29%), Edible oil (32%), and Cereals ( 10%).
- Seeds category will be least impacted.
- Agro Chemicals companies are going to be affected.
- All essential food items, Vegetables, milk, consumers will be the least effect by Cash flow, Supply chain, and Imports.
- Food Delivery, Online grocery, Poultry eggs, chicken, Seafood, Industrial oil will be profoundly impacted by Consumer Sentiment, Cash Flow, labor force, and Imports.
Impact of COVID-19 on HealthCare
- HealthCare shares 1.28% of the India GDP.
- There are more than 2 million healthcare workers in India.
- There are 529 Medical collages, 702 Ayush, 313 Dental, 253 PG Dental, and more than 25,000 Primary Health Centres in India.
- Post-Covid -19, the price of various drugs and hygiene products such as masks, gloves, disinfectants, and sanitizers are likely to see a surge.
- The supply chain of raw materials, APIs, and Medical equipment will be profoundly impacted.
- There will be an increase in health awareness.
- Currently, 19% of the urban population and 14% of the rural population have health insurance. In the future, it is likely to see a surge.
Impact of COVID-19 on Metal and Mining
- Metal and Mining Contribute 2.4% to the India GVA.
- The growth in production of the significant mineral was 25%.
- The production of Metal and Mining will be profoundly impacted.
- The price of various raw materials will decline.
- The cash flow will be severe.
- Steel, Aluminum, Copper, Iron Ore, and Cold will witness demand slowdown.
Impact of COVID-19 on MSMEs
- The MSMEs contribute 30-35% to the India GDP.
- MSMEs employees, more than 114 million people.
- The major sub sectors are Trade(36%), Manufacturing(31%) and other services(33%).
- According to All India Manufacture’s Organizations, If the lockdown is beyond four weeks, a quarter of 75 million MSMEs will face closure.
- The impact will be high and severe, considering its employees more than 114 million jobs.
- The production, cash flow, Supply chain, consumer sentiment, and exports will face heat.
Impact of COVID-19 on Oil and gas
- India is the third-largest energy consumer after China, and the U.S accounts for 5.8% of the world's energy consumption.
- The petrol, diesel, Aviation fuel, Natural Gas and LPG demand will plummet by 2/3 of the average requirement.
- The crude price, Cash flow, Imports, and consumer sentiment will be severely impacted.
Impact of COVID-19 on Pharmaceuticals
- The market size of Pharmaceuticals in India is $55 billion.
- It employees 2.7 million people in direct and indirect jobs.
- Generic drugs are the most impacted. However, its supply of raw materials supply disruptions will below.
- The production will be hit high because of the non-availability of labor, physical distancing, and lack of ingredients.
- The essential medicines, PPEs, and Sanitisers production are also impacted.
Impact of COVID-19 on Power
- The total Installed capacity is 3,68,689 MW.
- The Indian government allotted Rs 200 Billion in the budget for Power and renewable energy.
- If the industrial, commercial activities remain shut down, the power demand is likely to decrease by 50%.
- There are currently 62 GW thermal, 11 GW RE, and other projects in the pipeline, but they are likely to get delayed.
- Solar projects, which are mostly, depend upon China and Malaysia for Raw materials, are also going to be delayed in production and supply chain.
Impact of COVID-19 on Telecommunications
- The telecommunications sector contributes 6.5% to India's GDP.
- The price of raw materials, equipment manufacturing, and cash flow will be profoundly impacted.
- The OTT platforms are on the rise.
- There will be a sharp decline in Subscribers. However, bandwidth demands will increase.
- Post lockdown, the sector has the opportunity to assist commerce, get a new set of operative models.
Impact of COVID-19 on Transport and Logistics
- Transport and logistics contribute 14% to India's GDP.
- It employs more than 8 million people.
- Since the crude oil price will get low, the transportation costs will also decrease.
- The logistics demands will reduce, which will result in lower demand for transportation.
- Daily wage earners will be severely impacted in the short and medium-term.
Impact of COVID-19 on employment
- The coronavirus pandemic has severely impacted the job landscape in India.
- As per CMIE (Centre for Monitoring Indian Economy) about 21 million salaried employees salaried employees lost their jobs during from April to August.
- Around 3.3 million people lost jobs in a particular month.