Impact of Covid-19 on Indian Economy by Priyank Shah (Intern)

Introduction

The dreadful outbreak of Coronavirus, also known as COVID- 19 was first seen in the Wuhan city of China in December 2019. With passing months, in the month of March 2020, the World Health Organization (WHO) declared this outbreak as a world pandemic and since then the world has come to a stop. As of 21st May, there were more than 1 lakh cases reported in India with more than 3500 deaths. India is widely affected by this pandemic. Now looking at the population density in the country, the center and the states have come up with various methods and various action plans have been designed to contain this spread o virus, as there is no cure for it as of now. This outbreak has caused a lot of problems and the major being economic problems. The developed countries like USA, UK, etc. have come to a standstill and there is negligible trade going on right now in the world. The virus has badly hit the economy of these developed economies. With the effect the virus has shown in the developed countries, India being a developing country was bound to get affected with this current pandemic. India’s trade is not only limited to domestic means but also gets widely affected with the global decline in trade. The world right now is facing a big economic recession and no country is spared with this recession, India being a global player is bound to get affected with this global recession. The major reason being that the trade is at a standstill because of the lockdown throughout the world, and in India only essential supplies is open and rest all is closed. This world pandemic and the resultant lockdown is giving a severe blow to Indian economy. 

Impact

It is being estimated that due to various phases of lockdown, impact on consumption will be seen, which will have a huge impact on the economy. Due to reduction in the urban consumption and transaction, a huge impact on non- essential goods sector will be seen. Due to decrease in demand of domestic consumption, there can be delay in the investment and the liquid flow in the market will also get affected. The opportunities for revival of employment will solely depend on the healing of the economy i.e. how quick the economy heals. According to Du & Bradstreet, COVID-19 no doubt disrupted human lives and global supply chain but the pandemic is a severe demand shock which has offset the green shoots of recovery of the Indian economy that was visible towards the end of 2019 and early 2020. The revised Gross Domestic Product (GDP) estimates for India downwards by 0.2 percentage points for the fiscal year 2020 to 4.8 per cent and by 0.5 per cent for the fiscal year 2021 to 6 per cent. Further, it is stated that the extent of the actual impact will depend upon the severity and duration of the outbreak[1]. 

The impact of the coronavirus (COVID-19) pandemic had not only brought the global economy to a standstill but set the clock backwards on the developmental progress of several nations. While the rate of infection in India did not appear to be as high as in other countries, precautionary measures adopted dealt a severe blow to the country’s major industries- with finance, real estate & professional services bearing the largest brunt at an estimated loss of 17.3 percent[2]. 

Impact of key industries

Estimated impact from the coronavirus (COVID-19) on India between April and June 2020, by sector GVA

Relaxations

With the current state of pandemic in the world and looking to the condition of the trading sector domestically and throughout the world, the Government of India has announced certain relaxations in terms of tax and other revenues. The announcements have covered many sectors and are aimed to benefit the common trading sector, financial services, corporate affairs, etc. and the major focus was on providing relief to the poor. 

The major relaxations in the taxation (Direct and Indirect) sector are: 

• Income tax return for the financial year 2018-19 has been extended to 30-6-2020. 
• All the filings and proceedings by the authority and citizens be it notices, appeals, etc. have been extended to 30-6-2020. 
• For delayed payments of advanced tax, self-assessment tax, regular tax, TDS, TCS, equalization levy, STT, CTT made between 20.03.2020 and 30.06.2020, reduced interest rate at 9% instead of 12 %/18 % per annum (i.e. 0.75% per month instead of 1/1.5 percent per month) will be charged for this period. No late fee/penalty shall be charged for delay relating to this period[3]. 
• Those having annual turnover of less than 5 Cr can file GSTR- 3B by end of June and no penalty shall be levied. 
• Date of filing annual GST return for financial year 2018-19 has been extended to last week of June 2020. 

The Govt. has directed the banks to charge minimum banking charges for the financial transactions and relaxations have been given by the government in terms of loans, etc. many changes have been proposed in corporate affairs by the government. Many steps have been taken by the government through its various schemes like Pradhan Mantri Gareeb Kalyan Yojna, Ujjwala, MNREGS, etc. in catering the needs of the poor section of the society. 

Conclusion

It has happened for the first time ever that the world has come to standstill. This pandemic will prove to create a recession in the world; it is bound to damage the growth of global economy. The Prime Minister of India has already spoken of setting up an Economic Task Force to devise policy measures to tackle the economic challenges arising from COVID 19, as also on the stability of Indian economy. However, the concrete plans would have to be kept in place to support the economy and its recovery[4]. Looking at the brighter side, this is the time to reset. This has provided a unique opportunity to the people and the government to think on various policies concerning to FDI, environment, etc. the government can also restructure various institutions and can improve them. As the disruption from the virus progresses globally as well as within India, it is for us to forget, at least for the time being, all talking only about economic recovery, and instead join hands whole heartedly to tackle the outcome of COVID-19[5]. 

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[1] https://www.jagranjosh.com/general-knowledge/what-is-the-impact-of-coronavirus-on-indian-economy-1582870052-1
[2] https://www.statista.com/statistics/1107798/india-estimated-economic-impact-of-coronavirus-by-sector/
[3] https://www.mondaq.com/india/operational-impacts-and-strategy/936014/coronavirus-covid-19-and-indian-economy
[4] https://www.mondaq.com/india/operational-impacts-and-strategy/936014/coronavirus-covid-19-and-indian-economy
[5] ibid

About Author

Priyank Shah is pursuing B.A. L.L.B from GLS Law College, Ahmedabad. He is currently in 4^th year of the course. He is the member of GLS Legal Aid Clinic; he is also a Core committee member of GLS Placement Cell and GLS Moot Court Society. His core interest lies in Corporate Law and IPR and aspires to forward his career in the same mentioned fields. His interest lies in mooting and has achieved various accolades and laurels in the mentioned activity. He has authored various articles and a research paper and has a few publications in his same. He has completed various courses and in academics he has always achieved distinction. He believes that “Success usually comes to those who are too busy to be looking for it”. He is an ardent reader and believes that a lawyer must be updated with current affairs on daily basis, he believes in gaining knowledge and believes that the same knowledge when the time comes should be used for the benefit of the society and also in developing career. Apart from all these things, he is a big football fan and whenever he finds time, he invests his time in watching football.