Can India stay immune enough to combat COVID‐19 pandemic? An economic query

• Published date: 01 November 2020
• Author: Bijoy Rakshit,Daisy Basistha
• Date: 01 November 2020
• DOI: http://doi.org/10.1002/pa.2157

PRACTITIONER PAPER

Can India stay immune enough to combat COVID-19

pandemic? An economic query

Bijoy Rakshit

1

|Daisy Basistha

2

1

Humanities and Social Sciences Department,

Indian Institute of Technology Ropar, India

2

Department of Economics, Dibrugarh

University, Dibrugarh, India

Correspondence

Bijoy Rakshit, Humanities and Social Sciences

Department, Indian Institute of Technology

Ropar, Nangal Road, Rupnagar, Punjab

140001, India.

Email: bijoy.rakshit@iitrpr.ac.in

The COVID-19 pandemic has affected different sectors of the economy in an

unprecedented way, and this article is an attempt to analyze the economic effect of

the outbreak in India. However, before we assess the economic cost associated with

the pandemic, we economists fully consider the outbreak as a human tragedy. There

has not been any econometric technique that can account the countless human suf-

ferings that the crisis has brought. Through this article, we address several important

research questions and demonstrate India's strength to stay immune to combat

COVID-19 pandemic. The research questions are as follows. First, what will be the

effect of COVID-19 on the Indian economy and how does it affect the different sec-

tors of the economy? Second, how does the pandemic affect the bilateral trade rela-

tion between India and China? Third, we question the role of the public health

system in dealing with the outbreak of the virus in India. This article also presents the

growth projection of the Indian economy by different economic agents. We finally

conclude the article by mentioning a few policy recommendations for the Indian

economy.

1|INTRODUCTION

The outbreak of COVID-19, which was initially conceived as a

Chinese-centric shock, has now been understood to be a global crisis.

With the number of cases increasing rapidly, the World Health Orga-

nization (WHO) on March 12, declared COVID-19 as a global pan-

demic. The unprecedented outbreak of the virus has brought

considerable human sufferings to every sphere of human lives. In

addition to the public health emergency, the crisis has unpredictably

hit the world economy. The operations of the world economy have

substantially come to a halt. The economically challenging measures

adopted across the countries such as bans on traveling, imposing

restrictions on labor mobility, shutting down manufacturing compa-

nies, and sharp cutbacks in service sector activities to contain the dis-

ease, have produced enormous adverse effects on the economy.

However, an accurate empirical assessment about the size and persis-

tence of the pandemic and its likely impact on the world economy is

yet unknowable. The earlier pandemics (SARS, Avian Flu, MERS) had

affected particularly those countries that were economically less dom-

inant; moreover, the magnitude of the previous pandemics was much

smaller than COVID-19. The effect of this virus is, however, economi-

cally different. The number of infections is frequently changing on an

hourly basis. The top most affected economies out of the outbreak

are United States, Italy, China, Spain, France, United Kingdom, and

Germany. These economies accidentally happen to be the world's

largest economies as well. G7 economies have witnessed exponential

growth in the number of confirmed cases. These economies account

60% of the world's demand and supply, 65% of the world's

manufacturing, and around 40% of manufacturing exports (Baldwin &

di Mauro, 2020). Therefore, there is a saying going around that while

these large economies sneeze, the rest of the world will get the cold.

UNCTAD projects that the slowdown in the world economy as a

result of the outbreak of COVID-19 will cost around 1 trillion dollars.

According to the United Nations, the sudden decline in oil prices has

been the major contributing factor to the global economic slowdown.

Figure 1 highlights the loss in GDP growth worldwide.

Although the pandemic is likely to affect the advanced econo-

mies, most, emerging economies like India cannot stand unaffected.

Governments in many countries have expressed their concern and

imposed lockdown to mitigate the rapid spread. Since India has

Received: 6 April 2020Revised: 14 April 2020Accepted: 15 April 2020

DOI: 10.1002/pa.2157

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https://doi.org/10.1002/pa.2157