The Impact of COVID-19 on the Indian Economy

 The Impact of COVID-19 on the Indian Economy

With the second largest population and the third-largest economy, India is one of the world’s leading industrial powerhouses. India has a long history of consistently moving towards greater economic growth and development, which can be seen in its rapidly widening middle class. The country was undoubtedly heading in the right direction before the outbreak, but the COVID-19 pandemic has definitely brought with it some major changes.


Since 2018, India has seen a gradual decline in its GDP growth, although, this was likely caused by internal adjustments made by the National Statistical Office (NSO). It’s important to note that most industries were likely growing during this period. However, since the outbreak, several industries have been dramatically altered. This was namely the tourism, agriculture, and eCommerce sectors, as well as the wider Micro, Small, and Medium Enterprises (MSMEs).

The tourism industry has suffered the most negative effects of this pandemic. After both domestic and international travel came to a grinding halt, the income and economic activity usually associated with the tourism industry became virtually nonexistent. This is particularly detrimental to India, as travel and tourism account for 9.2% of its GDP. As the duration of the COVID-19 pandemic is yet to be ascertained, this industry is stuck in a limbo which has led many to look unfavorably upon its future. Only time will tell what the lasting effects of this prolonged hiatus will be, but a reduction in jobs and revenue is anticipated.

The agriculture industry has also faced a unique set of challenges, as India depends heavily on this industry for employment in many rural and semi-urban areas. Agriculture accounts for 16.5% of GDP, as well as a whopping 43% of employment. Although it’s anticipated that an extended lockdown will lead to greater demand for produce, this is balanced against the issues of maintaining employment in a safe and manageable environment. If the pandemic continues, it is likely that appropriate adjustments will be made in this sector to make up for the reduced labor force. However, among the lasting effects of the COVID-19 pandemic will be the crops produced by the agriculture industry, as reduced demand for exports has made some crops uneconomical to continue producing.

Another major industry affected by a pandemic is India’s eCommerce sector. This industry was previously in a developing stage, however, the increased demand for online services spiked after lockdown measures were implemented. However, despite the increased sales, some eCommerce retailers have struggled to meet this boom in demand for a variety of reasons. One such factor has been the issues in securing delivery services amidst more restrictive travel regulations, another side-effect of the pandemic.

MSMEs rank amongst the largest industries, accounting for 30 to 35% of India’s GDP. These enterprises are comprised of businesses in multiple sectors. Many of these businesses rely on importing and exporting to run their organizations, and so many have faced difficulties. Despite government relief, many are still struggling. This is perhaps the best indicator of India’s current predicament, however as the pandemic progresses and proper adaptions and regulations are continued to be implemented, it is likely these effects will lessen in severity.

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