Contagion effect of COVID‐19 outbreak: Another recipe for disaster on Indian economy

• Published date: 01 November 2020
• Author: Manish Kumar Singh,Yadawananda Neog
• Date: 01 November 2020
• DOI: http://doi.org/10.1002/pa.2171

PRACTITIONER PAPER

Contagion effect of COVID-19 outbreak: Another recipe for

disaster on Indian economy

Manish Kumar Singh|Yadawananda Neog

Department of Economics, Banaras Hindu

University, Varanasi, India

Correspondence

Manish Kumar Singh, Department of

Economics, Banaras Hindu University, Varanasi

221005, Uttar Pradesh, India.

Email: manishk.singh4@bhu.ac.in

The global outbreak of COVID-19 and subsequent lockdowns raises serious eco-

nomic concern and havoc worldwide. This article tries to provide an economic per-

spective of COVID-19 in India using some statistical figure of economic indicators.

Analysis is based on the data collected for macro-economy, travel & tourism, trans-

portation, stock market, human capital and trade. Finding revel that India could expe-

rience a health debacle at present and excruciating economic contraction in the near

future if the government is unable to execute a proper policy framework. Based on

the discussion, a few policy suggestions have been presented to counter both health

and economic crisis.

1|INTRODUCTION

In January 2020, World Bank argues that growth in almost all emerg-

ing markets and developing economies regions have been weaker

than expected due to the global trade tension, sharp downturn in the

major economy and financial disruptions. They suggest that there is a

need to rebuild macro-economic policy space, pursue decisive reform

to bolster governance and business climates, improve tax policy, pro-

mote trade integration and rekindle productivity growth while

protecting vulnerable groups (World Bank, 2020). But, the whole sce-

nario has changed, not because of inappropriate policy intervention, it

is because of Coronavirus diseases 2019 (COVID-19). China reported

the first case to the World Health Organisation (WHO) country office

in China on 31st December 2019. The WHO on 30 January 2020, has

declared it, as a public health emergency of international concern and

on 11 March 2020, COVID-19 has been declared as a pandemic by

the same organisation. The spread of the virus and its impact on mor-

tality and morbidity can be assessed by the fact that it reached

697,244 confirmed cases worldwide and 33,257 deaths across the

204 countries and territories (WHO, 31 March 2020) and it is going

to be more severe because the trend is rising continuously.

The COVID-19 outbreak is first and foremost a human tragedy,

affecting hundreds of thousands of people. Thus, many countries have

been lockdown and restrict their economic agents to mobilise from

one country to another country and even within the country due to

the communicable COVID-19. It is having a growing impact on the

global economy and unfortunately, the global health crisis becomes a

global economic crisis due to the cancel of flights, restriction on labour

mobility and volatility in stock markets, fall in oil prices, and so on. For

vulnerable families, loss of income due to an outbreak can translate to

spikes in poverty, missed meals for children and reduced access to

healthcare for beyond COVID-19.

Surveys of China's manufacturing and services sector plunged to

record lows in February (Business News, 2020), automobile sales sank

a record 80% (Bloomberg News, 2020), and China's exports fell 17.2%

(Bermingham, 2020) in January and February. As COVID-19 spreads,

China's economic recovery will be challenged as demand from other

countries drops as they cope with the virus. Although the outbreak

appears to have slowed in China, COVID-19 and its impacts have

gone global. The United States, China, Japan, Germany, Britain, France

and Italy have contributed 60% of world supply and demand [gross

domestic product (GDP)], 65% of world manufacturing, and 41% of

world manufacturing exports (Baldwin & di Mauro, 2020) but unfortu-

nately, these are in the top-10 most affected countries by COVID-19

except Japan (WTO, 28 March 2020). Annual global GDP growth is

projected to drop one-half a percentage point (from 2.9 to 2.4%) in

2020, with growth possibly even being negative in the first quarter of

2020 (OECD, 2020). In this addition, the head of the IMF (Kristalina

Georgieva) said the World economy had entered a recession “as bad

or worse”than the global financial crisis of 2008–2009 (Elliott, 2020).

This global outbreak reaches to more than 200 countries and

India is also one of them. The cases of the virus in India has been ris-

ing day by day and upraised the concerns regarding its economic con-

sequences (refer to Figure 1). India is one of the fastest growing

Received: 1 April 2020Revised: 10 April 2020Accepted: 28 April 2020

DOI: 10.1002/pa.2171

J Public Affairs. 2020;20:e2171.wileyonlinelibrary.com/journal/pa© 2020 John Wiley & Sons, Ltd1of8

https://doi.org/10.1002/pa.2171