COVID-19: Impact of Economy

COVID-19: Impact of Economy

Several countries are in a state of lockdown and businesses have suffered significant disruption. COVID-19 has given a setback to some of the strongest economies around the globe. Organizations are struggling to cope up with the financial instability and economic activities that drive growth. Many Indian industries are now in critical need for a relief package.

The COVID-19 pandemic has been a massive blow to India, with some sectors facing a high financial crisis. Let’s have a look at the industries which mostly got hit by the virus.

Especially the travel, tourism, and hospitality industries, which have come to an absolute standstill.

Tourism & Aviation

COVID19 has impacted the tourism sector on a larger scale. The outbreak has stopped travel of domestic and international carriers to cancel and suspend flights operating from different places of the world. Vastly, the government has also prevented any travel between china and Hong Kong. The temporary full stop has thus reduced revenue targets heavily.

Especially the travel,which have come to an absolute standstill. However, as of June 1, India has moved into the fifth phase of the lockdown – Unlock.While this cap has now been removed. Busy airports have placed a limit on daily arrival and departures which in turn restrict airlines from flying across more circuits. Metros linking the city to the airports will also remain closed during this period.

MSME Sector

The micro, small and medium enterprises (MSMEs) are the sectors which are hugely affected by all Indian sectors. They are the backbone of all industries and often engaged in export and manufacturing activities. The sector is reeling under heavy financial crisis and has appealed to the government for an increase in their relief package, which contributes to over 30% of India’s GDP. The government has thus planned to release 20K crore relief package for helping the affected ones. Although, the support from the government t isn’t enough for the burden of loans and repayments.

Hospitality Sector

The hospitality sector in India has declined sharply as COVID-19 outbreak various segments of the industry. Almost all Indian hotels sector witnessed a decline from the third week of March 2020. More than 60% of hotels are shut in several parts of the country. The strong performance of the sector was the key to steady hotel market performance across the cities of India, and now the growth and development are likely to slow down in the coming two years.

Examples were medical and other essential workers staying close to critical employers or afraid to return home and logistics companies moving products across the country.

Information Technology

IT companies are heavily dependent on manpower and are not able to operate due to restriction in movement of people arising from lockdown and quarantine issues. Consequently, they are not able to complete or deliver the existing projects in time and are also declining new projects.

Besides the pandemic primarily hits the sectors mentioned above, the finance sector also leads to the risk of steep fall in the loan. Besides, the epidemic has created adverse outcomes and worsened the capital cycles and slower prepayments. Apart from this, the real estate sector could be slow and painful and is facing the negative slowdown of malls and large shopping complexes.