Covid Impact on Economy

Sat Jun 5, 2021

We have heard the news in March that if the pandemic hits, will bring India 10 years back. But the impact was more than what we thought. In past years, there were ups and downs but after the 1980’s recession GDP (Gross Domestic Product) growth of India never went down from 3%. And today here we stand where the GDP has not grown in 2020 but declined due to the impact of Covid – 19. All the sectors were all hit together bringing down almost all the nation's GDP whether developed or not to a negative remark.

Balance of payments is a concept whereby governments shall maintain a balance in imports and exports such that the imports are never more than exports as that would be an outflow of funds from a country. When imports are more than exports such is termed as a trade deficit.

The impact of the trade deficit had a hard hit on the Indian economy as the government planned a lockdown way before due to safety reasons and extended for a period of time that wasn’t planned at all. Many small companies and traders went insolvent as the cost of running cost was higher than profits earned. Banks were also hit by a decrease in interest rates, extended payment of loans were introduced, and a change in monetary policies. The clothing and automobiles sector was at a dead-end during the lockdown as these companies were completely out of business, hence might take more time than other industries to stabilize themselves.

On the contrary, Pharma Industry had an unexpected rise due to the pandemic. They shot up and recovered their position as was in 2015 (the year of infectious diseases). The exhibit below explains that pharma shall not be the industry to invest in unless the assumptions of no covid repetition changes or any certain disease occur which is totally unknown at the given point. The growth of the pharma industry can be said to be a short-run growth rate that might remain stable or might decline. It can also be concluded that the growth of pharma is inversely related to the growth of such countries. Hence, the above impacts are the one scene through and thought upon for the future.