research paper on impact of covid 19 on indian economy

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The Impact of COVID-19 Epidemic on Indian Economy Unleashed By Machine Learning

Kamal Deep Garg 1 , Manik Gupta 2 and Munish Kumar 3

Published under licence by IOP Publishing Ltd IOP Conference Series: Materials Science and Engineering , Volume 1022 , 1st International Conference on Computational Research and Data Analytics (ICCRDA 2020) 24th October 2020, Rajpura, India Citation Kamal Deep Garg et al 2021 IOP Conf. Ser.: Mater. Sci. Eng. 1022 012085 DOI 10.1088/1757-899X/1022/1/012085

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1 Chitkara University Institute of Engineering and Technology, Chitkara University, Punjab, India

2 Chitkara University School of Engineering and Technology, Chitkara University, Himachal Pradesh, India

3 Chitkara Business School, Chitkara University, Punjab, India

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The outbreak of the Corona Virus (COVID-19) that has begun in December 2019 drastically affected the world. Endemic Coronavirus (COVID-19) is rapidly growing across the globe. SARS-CoV-2 is the virus name that causes a highly contagious and deadly disease COVID-19. It also entered India by the end of January 2020 and has significantly influenced India. More than two million people worldwide have been confirmed to have been contaminated with this virus as of the date (29 July 2020), and more than 7, 24,000 have died of this disease. The governments of most countries, including India, have already taken several measures to reduce the spread of COVID-19, such as lockdown, social distancing, closure of shopping malls, gyms, schools, universities, religious gatherings, etc. This lockdown has affected every Indian sector, such as the Economy, Retail Sector, Tourism Industry, etc. This paper aims to explore to what extent a 2020 epidemic like Covid-19 had impacted the Indian economy using a machine learning approach. The statistical data from esteemed and trustworthy information sources were gathered to realize the impact of the Corona Virus on the Indian economy. Based on this trusted data, analysis has been performed using the various regression models.

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An assessment of socioeconomic impact of COVID‐19 pandemic in India

Ranjan aneja.

1 Department of Economics, Central University of Haryana, Mahenderagrh India

Vaishali Ahuja

Coronavirus (COVID‐19) pandemic has created an unprecedented loss and disruptions over all across the world. From developed to developing, no country has been spared from its brunt. In this paper, we have analyzed the implications of COVID‐19 on the economy and society of India so far. An impact assessment on the basis of available lietrature is made on all the three sectors—primary, secondary and service sector along with the impact on migrants, health, poverty, job losses, informal sector, environment, and so forth. The all sectors of the economy has been disproportionately affected and even within a sector, there is a disproportionate loss. The societal impacts are dire too with job losses, mental illness, increased domestic violence, and so forth. Some positive effects can be seen in terms of improved air quality, water quality, wildlife but the sustainability of such impact is conditional upon post‐COVID and people's habits and future policies related to the environment.

1. INTRODUCTION

COVID‐19, caused by a new strain of coronavirus, risen out of Wuhan city of China in December 2019 has been called a pandemic by the World Health Organization. It has created an unstable environment for individuals, loss of business activities, and loss of employment. This has halted a large number of economic activities because of infectious nature and has no vaccine till date. As on June 24, 2020, there are around 9,129,146 cases globally out of which 4,73,797 lost their lives. 1 India is on the fourth place in the number of confirmed cases and first in Asia. Total confirmed cases in India are 4,56,183 out of which 14,476 lost their lives mainly in the states Maharashtra and Delhi (Ministry of Health and Family Welfare, GOI). 2 3 Most of the countries including even developed nations like United States, Italy, and United Kingdom are not prepared enough to deal with this pandemic. Presently, the worry is not for just human well‐being besides for the worldwide economy which is most noticeably awful hit in each viewpoint. Economic disturbances are probably going to be more extreme and extended in developing and emerging countries with bigger domestic outbreaks and the more fragile and weak healthcare system; with larger exposure to international spillovers through various channels like trade, tourism, and commodity and financial markets; weaker macroeconomic frameworks; and more pervasive informality and poverty (Global Economic Prospects, World Bank, 2020). It is not just a health crisis; it is the economic and humanitarian crisis and called a black swan by many economists. As a result of its infectious nature, almost all nations favored lockdown to limit its spread. Following this, India initially proclaimed a one‐day “Janata Curfew” on March 22, 2020. From there on, a total lockdown was reported in India at first for 21 days which was extended to an additional 19 days, and thereafter it got broadened further with minor relaxations. After June 1, many relaxations are given to proceed with the economic activities but borders of some states are sealed even now depending on the severity of the health crisis in a particular state. All the economic activities however now been provided some relaxations after a complete halt on them but an unprecedented loss has already occurred and the economy is shaken badly.

India is also amid a severe crisis. “This is the greatest emergency for the Indian economy since independence,” said Raghuram Rajan, former RBI Governor. This is worse than the financial crisis of 2008, which affected the demand side but workers/people could still go to work, the financial conditions of government of India was sound but it seems that everything is against the economy this year. 4 Almost all the countries due to COVID‐19 are affected similarly in terms of demand–supply shocks and disruptions but in India, there was already a downturn in the economy. In Pre‐COVID era India was encountering with major macroeconomic issues such as nearly recession with the sluggish GDP growth rate of 4.7% in 2019 which is lowest since 2013 (as indicated by the official statistics), high unemployment rate, decline in industrial output of core sectors—the worst in 14 years, stagnancy in private sector investment, decline in consumption expenditure for the first time in several decades (Dev & Sengupta, 2020 ). Also, the informal sector of India which is the largest in the world employs nearly 90% of the total working population and contributes significantly in overall GDP (more than 45%) has been hit by two major shocks (or reforms) already due to demonetization in 2016 and GST in 2017. 5

The financial sector who has got the most important role to play in the crisis times has also been having huge problems in India like Twin Balance Sheet (TBS), high levels of non‐performing assets (NPAs) and an inadequately capitalized banking system. In the private corporate sector too, firms are financially weak and over‐leveraged (Sengupta & Vardhan, 2019 ). Some more problems like IL&FS crisis, decline in commercial credit of around 90% in FY2020(Q1) etc. 6 , 7 With the emergence of such a deadly disease, a new set of challenges is ready for India for both the short‐run and long‐run. Albeit the macroeconomic uncertainty cannot be gauged, the situation requires major policy interventions in terms of healthcare infrastructure, livelihood, vulnerable sections and various humanitarian issues. Variant of helicopter money—“money financing of the fiscal programme” is a solution suggestion by (Chakraborty & Thomas, 2020 ) as an innovative method for financing deficit.

In this article, an attempt is made to investigate the socioeconomic implications of the draconian coronavirus pandemic (COVID‐19) in India. The motivation behind this is to provide an overview of the loss that occurred to different sectors of the Indian economy and society to have a better understanding of the issues to the government. In this article, we have reviewed many latest articles, authentic newspaper articles, discussions, and interviews of experts from different fields, and so forth.

The article is organized in four sections including Introduction. Section 2 reviews the various researches highlighting the economic impact on different sectors—Primary, secondary, and tertiary sectors. Section 3 showcases the various studies of societal impacts and lastly, Section 4 concludes the study.

2. SECTORAL IMPACTS OF COVID ‐19 ON INDIAN ECONOMY

2.1. primary sector, 2.1.1. agriculture and allied activities.

To contain the spread of COVID‐19, just like how other countries did, India imposed a complete lockdown in march which coincided with the peak of harvesting season of Rabi crops in India mainly in the north‐west which posed significant losses to the farmers. Although there were relaxations to the agriculture sector during lockdown but transport constraints, mobility restrictions and lack of labor due to reverse‐migration of labor to their native places were the major problems faced by the farmers. Farmers in Maharashtra called it a worse situation than that occurred during the demonetization in 2016 (Saha & Bhattacharya, 2020 ).

Before this pandemic, the rural economy of India was witnessing a decline in incomes of mainly casual workers 8 along with declining rural wages (real). Some rays of hope were seen in January 2020 when food prices started rising but all hopes collapsed with this new crisis. (Mukhopadhyay, 2020 )

Agriculture and allied activities are not a homogenous group of activities, in fact, an umbrella of different activities having their different dynamics each. So, the impact of COVID‐19 on this sector varies according to the set of activities, that is, on crops, livestock, fisheries, and so forth. Horticulture and Foodgrains production is part of crops and is impacted differently. Horticulture is likely to face the brunt more because of the nature of perishability whereas food grains are non‐perishable and apart from problems in harvesting and labor shortage, this is not impacted much. Rabi harvesting has gone well and MSP hike has also been announced for the Kharif crops which assures farmers a 50–83% return on their production cost. With declining demand and reduction in exports of fruits and vegetables, horticulture is hit hard. Similarly, floriculture has been affected because of less demands due to shut down of religious places, postponement of marriages, and so forth. In livestock (milk, meat, eggs), milk is the major contributor that has been impacted and fortunately, had stability during the lockdown.

Fishing and aquaculture are expected to have a high negative impact, food grains and livestock low, and horticulture medium, relatively. Agriculture seems to be a bright spot in India amid the COVID‐19 crisis and CRISIL expects agriculture to grow at a rate of 2.5% in FY2021. (CRISIL, 2020 ).

2.2. Secondary sector

2.2.1. manufacturing sector.

The manufacturing sector is the major contributor of GDP and employment in the secondary sector and has been recognized as an engine for vibrant growth and creator of the nation's wealth (Rele, 2020 ). The manufacturing sector is important in the way that it has strong linkages with other sectors, both forward and backward linkages so any impact in this sector will affect other sectors as well. Overall, the manufacturing sector is going to be affected badly by demand–supply disruptions and global value supply chain.

The 50% contributor to the manufacturing sector, the automotive sector was suffering before COVID‐19 too due to low consumer demand, inadequate credit facilities, and more problems due to the NBFC crisis. There is a lot of pressure due to demand–supply disruptions on the health of the auto sector in India due to COVID‐19. As per the latest assessment related to the impact of COVID‐19 done by SIAM, the auto sector is expected to have a decline between 22% and 35% in various industry segments conditioned with GDP growth of 0–1% for FY21. said Rajan Wadhera, President, SIAM. 9

From decades, China has been the epicenter of manufacturing accounting for one‐third of total manufacturing over the world. But after the outbreak of COVID‐19, many countries are planning to shift focus from China and looking for countries like China where cheap labor is available. So, it is a golden opportunity for India to make “Made in India” global. There is huge potential in India, if proper measures will be taken to boost the manufacturing sector, India will emerge as a new manufacturing hub surpassing China.

The micro, small and medium enterprises (MSMEs) as a whole form a significant share of manufacturing in India and play a crucial role in providing employment opportunities and also in the country's exports. As indicated by recent reports MSMEs contribute 30% in India's GDP and 50% in the employment of industrial workers. But this sector has issues like the non‐availability of adequate, timely, and affordable institutional credit. Although all the businesses and sectors are affected due to the pandemic, this sector is badly hit due to reduced cash flows, supply chain disruptions, shortage of migrant workers due to reverse migration, less demand, and so forth. Like China, India is also expected to have major destructions in this sector with more challenges to small firms as compared with upstream firms (Dev & Sengupta, 2020 ).

It is not easy to re‐start MSMEs once they are shut down (Chidambaram, 2020 ). India's Sherpa to the G20 also said that small industries are most vulnerable and it is difficult for them to survive without financial assistance because of their incapability to deal with such sudden disruptions. 10

2.3. Service sector

2.3.1. financial market and institutions.

The financial sector who has got the most important role to play in the crisis times has also been having huge problems in India like Twin Balance Sheet (TBS), high levels of non‐performing assets (NPAs) and an inadequately capitalized banking system. In the private corporate sector too, firms are financially weak and over‐leveraged. (Sengupta & Vardhan, 2019 ). Some more problems like IL&FS crisis, decline in commercial credit of around 90% in FY2020‐first half, and a near‐demise of a well‐known and reputed private bank—Yes Bank, and so forth.

To what extent the financial market will be affected depends on the severity and longevity of the crisis, effectiveness of the implementation of fiscal and monetary policies and central bank's reactions (Beck, 2020 ).

There is no such impact on the banking sector, but because banks are at the forefront of public attention the indirect impact of several other sectors that are hit by the pandemic is likely to be on the banks and other financial institutions. Banks are the major source of help in times of crisis, therefore when all other sectors are hit badly, banks will also face the brunt. The already existing problems in the financial sector are expected to multiply due to this draconian crisis. The stock market has also seen the worst in March, 2020 due to the lockdown and collapse of various business activities.

Subramanian and Felman ( 2020 ) suggested that around one‐third of industrial and service firms have applied for moratoria on their bank loans. The stock of non‐performing assets (NPAs) may increase by Rs. 5 lakh crore even if only a quarter of these deferred loans go bad, eventually. And this is a conservative estimate. Senior bank officials have been quoted as estimating that the stock of NPAs could increase by as much as Rs 9 lakh crore. In this case, we would be looking at NPAs of Rs 18 lakh crore, equivalent to around 18% of current loans outstanding. For planning purposes, it is worth considering who will pay for such losses, if they do materialize. 11

Other important dimensions of service sector like aviation, transport, travel, and tourism are worst hit not only in India, but globally. The loss to this sector too will be based on the severity and longevity of the crisis. A report by KPMG indicates that around 38 million job losses are expected in India's travel, tourism and hospitality industry. 12

3. SOCIETAL IMPACTS OF COVID‐19

3.1. gender gap and inequality.

It has been estimated that globally, women are more likely to be vulnerable to losing their jobs as compared to men due to the COVID‐19 pandemic. 13

The drop in employment is found to be biased and not gender‐neutral in India which has one of the most unequal gender division of domestic work globally. The drop in absolute number is more for men compared with women because of the already existing large gender‐gap in employment. By comparing the pre and post lockdown hours spent on domestic chores, a decline in gender gap is found in terms of hours devoted to domestic chores on an average during the first month of lockdown in most of the states. Also, there is an increase of 0.5 to 4 hours in men's proportion of housework post‐lockdown. Still, the male proportion/distribution continues to be skewed to the right (Deshpande, 2020 ).

Considering the disproportionate burden of the crisis on low skilled workers, poors, other vulnerable sections, many economists think that COVID‐19 is most likely expected to raise inequality within and among countries (Initiative on Global Markets, 2020 ) and the results of study conducted by (Furceri, Loungani, Ostry, & Pizzuto, 2020 ) confirms that those having basic education (low skilled) are affected more than those with higher and advanced degrees, in terms of loss of income hence confirming increase in income inequality after during and after pandemics.

3.2. Health crisis—rural/urban

Due to the paucity of testing services, shortage of doctors, health equipment, beds even in the developed area of India, COVID‐19 is a major threat for India. With a subsequent rise in the no. of confirmed cases India's capacity to contain the further spread and to handle the current cases is questioned by many experts. As per the National Health Profile of India, 2019, India's expenditure on healthcare as % of GDP was merely 1.28% which is lower than poorer countries of the world (Rakshit & Basishtha, 2020 ). Coronavirus Pandemic has disproportionately affected the rural and urban areas. Presently, the brunt is faced more in urban areas because of the high density of people. But the risk is much more to the rural areas where around 70% of India's population resides. India's healthcare sector is still developing and there are large differences in the healthcare systems of rural and urban areas. The rural health care system which is a three‐tier system is comprised of‐

• Sub‐centres with 23% shortfall in healthcare facilities,
• Primary Health Centres with 27% and
• Community Health Centres with 28% shortfall, as of July 1, 2019. 14

The healthcare system in the rural area is not adequate to handle this pandemic and the transmission especially in the northern states where population density is high because of doctors' shortage, healthcare facilities like very less availability of no. of beds per thousand people, equipment, and so forth. (Kumar, Nayar, & Koya, 2020 )

3.3. Domestic violence and crime

According to the latest report by National Commission for Women (NCW), within 25 days following lockdown, there was a 45% increase in the number of cases of domestic violence against women. Domestic violence cases have seen an upsurge mainly in states of Uttar Pradesh, Bihar, Haryana and Punjab 15 with a near doubling of the cases as compared to pre‐lockdown cases said NCW chief Rekha Sharma. The real situation, however, may be more dangerous because many women from rural areas especially do not file a case and raise their voice and are scared of their husbands and family (Kundu & Bhowmik, 2020 ).

For the overall crime rate, there has been good news since lockdown that the crime rate has decreased significantly in India and globally too but studies shows that the hunger, poverty and inequality which are the after results of any crisis and pandemic lead to increase in the crime rate (Uppal, 2020 ).

3.4. Reverse migration

After the partition in 1947, it is the second biggest mass relocation that India is experiencing. More specifically, it is the “reverse migration.” As indicated by IMO (International Migration Organization, 2011) return or reverse migration is the act/process or movement of individuals back to their local spots who prior moved to urban communities or urban regions looking for employment and to gain bread‐butter for their families.

As indicated by the Census of India, 2011 Delhi and Maharashtra had the most extreme number of the flow of migrants for the most part from the states of UP, Bihar, Rajasthan, Odisha, Assam, Punjab, West Bengal, Madhya Pradesh. And at present Maharashtra is followed by Delhi in the highest number of COVID‐19 cases. (Ministry of Health and Family Welfare, Government of India). Now, due to COVID‐19 there is mass reverse migration due to limited employment opportunities, fear of more destruction due to the uncertainty of future crisis, financial crisis, health crisis, and so forth. The extent of this reverse migration was such that the efforts of government through policies could not match this crisis. (Mukhra, Krishan, & Kanchan, 2020 )

Singh ( 2020 ) studied the impact of the coronavirus pandemic on the rural economy of India mainly about the plight of migrant workers and the short run‐long run implications of COVID‐19 on the rural economy. He stated that COVID‐19 is going to affect the rural economy in both the short run and long run with reverse migration exerting excess pressure on the agriculture and rural economy that will significantly affect the poverty and will put a greater number of people into abject poverty. He also discusses that although the government is announcing schemes and helping in many ways. But mass corruption in the system is the biggest challenge in the effective implementation of plans.

3.5. Poverty, job losses and informal sector

According to the World Bank (2016) report, every fifth Indian is poor with around 80% population residing in rural areas. 16

At least 49 million individuals all over the world are expected to dive into “extreme poverty” as a direct result of the destruction caused by the pandemic and according to World Bank, India is estimated to have its 12 million citizens pushed in extreme poverty (Bloomberg, 2020).

According to the Centre for Monitoring Indian Economy (CMIE), in India more than 122 million people lost their jobs in April 2020, out of them largely were the small traders and wage‐laborers. According to a phone survey of 4,000 workers conducted by Centre for Sustainable Employment, around 80% of urban workers in the sample lost jobs with a sharp decline in the earnings of farmers and those who were self‐employed in sectors other than agriculture. 17

Pre‐existing similarities in the formal and informal sectors in India are more likely to be increased because the informal or unorganized sector or workers do not have access to social security benefits and there is a lot of uncertainty in their work. The informal sector workers were already facing issues like low wages and income and in this pandemic, they are among the most affected people. Around 40 to 50 million workers are seasonal migrant which are directly and harshly affected and moved back to their native places (reverse migration) due to lack of employment, income, shelter, and so forth (Dev & Sengupta, 2020 ).

3.6. Psychological impact—mental illness

Apart from the health and economic crisis, this is the major challenge to every country hit by the pandemic. Due to lockdown, mass unemployment, the collapse of various businesses, loss of income, increasing inequalities and poverty, deaths, less mobility, and so forth. there is a huge impact on the mental status of people. From older to younger, rich to poor, everyone is affected. This outbreak is resulting in additional health issues like anxiety, stress, depression, anger, fear, and so forth, globally. (Torales, O'Higgins, Castaldelli‐Maia, & Ventriglio, 2020 )

The psychological challenges can be severe to marginalized people like farmers who already have psychological burdens due to pre‐existing problems in the agriculture sector. Nearly 16,500 cases of farmers' suicide are reported every year due to their poor socio‐economic conditions and due to COVID‐19 such cases can be aggravated. (Hossain et al., 2020 )

Recent studies in psychological science and evidence show that similar pandemics like the current one increased mental health problems like post‐traumatic stress disorder (PTSD), confusion, loneliness feeling, boredom during and after the quarantine too. ( Brooks et al., 2020 )

Older people are battling with larger health risks as well as are likewise prone to be less fit for supporting themselves in isolation. Although social distancing is important to contain the spread of the virus, if not executed effectively, such measures can likewise prompt expand social confinement of older people when they might require the most support. (UNDP, 2020) So, there is more stress and tension for older people and the youth there are several challenges too. Schools and Colleges are yet closed and there is disruptions in studies, those who are weaker at studies and do not have internet access to study online (like in some rural areas, especially girls are not allowed to have a phone and internet connection) are likely to face the brunt more. And those who are about to enter the workforce are likely to face problems due to changing needs of the employers and less vacancies These all factors lead to mental stress and in extreme cases where people are already suffering from some mental illness, the consequences of this pandemic may be harsh.

3.7. Positive impact on environment

With serious negative implications and destruction to the economy and people, COVID‐19 has got some positive implications too.

One such is a gift to the river Ganga. In just 34–35 days of lockdown due to COVID‐19 in India, the pollution in the river has decreased significantly which the two major plans, Ganga Action Plan, 1986, and Namami Gange, 2014, with hundreds of crores investment could not do, said Prof. B. D. Tripathi, Chairman, Mahamana Malaviya Research Centre for Ganga. 18

There is a positive impact on air quality, water quality, wildlife and vegetation due to less traffic, less pollution due to lockdown and less business activities etc. 19

4. CONCLUSION

COVID‐19 pandemic has incurred unprecedented loss globally but India being an emerging economy is likely to get more affected in every sector and that too disproportionately. Agriculture and allied sector have been hit disproportionately with horticulture, poultry facing more brunt but overall agriculture sector is seen as a bright spot and is likely to get affected less as compared with loss occurred to other sectors. Manufacturing sector especially automotive sector and MSMEs are suffering more loss and due to global suppy chain disruptions this sector is affected badly. Service sector which is the key driver of economic growth and largest contributor of GDP has been hit hardly due to various restrictions on mobility, halt on tourism and hospitality for the time being, very less transport activities, shutdown of schools/colleges, and so forth. The overall loss to the economy and to different sectors depends on the severity and longevity of crisis. Amid this coronavirus pandemic and an unprecedented crisis, apart from the monetary losses, the societal impact is harsh with major sociological and psychological challenges. Already existing poverty and inequality is likely to increase with major negative impact on migrants, casual and informal worker with domestic violence and mental illness being another major challenge. Although there are some positive impacts also but the sustainability of these impacts on air quality, water quality, wildlife is conditional to post‐lockdown scenario and people's behavior and habits. Various fiscal and monetary policy measures are undertaken and announced by the government and Reserve Bank of India but prominent economists are of the view that more spending is needed by the government regardless of the GDP numbers and fiscal deficit. In fact, more attention is needed toward the vulnerable sections of the society and sectors especially poor people, MSMEs and the non‐essential commodities sector who is worst hit in this demand contraction due to pandemic. Unique, inclusive and innovative measures are the need of the hour.

Biographies

Dr. Ranjan Aneja is an Associate Professor in Department of Economics, Central University of Haryana, India. His area of interest is Economic Modeling and Policy Analysis, Macroeconomic stability and Regional Economics. He has published several papers in premium journals. He serves as reviewer to multiple journals of international repute indexed in Scopus and Web of Science and listed in ABDC.

Ms. Vaishali Ahuja is a student of post‐graduation in Economics at Central University of Haryana, India. Her area of interest is Resource Economics and Macro Economics. She has attended several seminars and conferences of national and international repute.

Aneja R, Ahuja V. An assessment of socioeconomic impact of COVID‐19 pandemic in India . J Public Affairs . 2021; 21 :e2266. 10.1002/pa.2266 [ PMC free article ] [ PubMed ] [ CrossRef ] [ Google Scholar ]

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2 See https://covid19.who.int/region/searo/country/in

3 See https://www.mohfw.gov.in/

4 See https://economictimes.indiatimes.com/news/international/world-news/covid-19-pandemic-worse-than-2008-09-financial-crisis-imf/articleshow/75161296.cms?from=mdr

5 See https://www.ideasforindia.in/topics/macroeconomics/reviving-the-informal-sector-from-the-throes-of-demonetisation.html

6 See https://www.livemint.com/industry/banking/rbi-imposes-moratorium-on-yes-bank-caps-withdrawals-at-rs-50-000-sources-11583421982753.html

7 See https://economictimes.indiatimes.com/industry/banking/finance/banking/risk-aversion-how-failed-bank-loans-have-led-to-a-credit-crisis-for-indias-small-biz/articleshow/71932092.cms?from=mdr

8 There are around 40–50 million seasonal migrant workers in India.

9 See https://economictimes.indiatimes.com/industry/auto/auto-news/siam-says-auto-sector-left-out-in-eco-package/articleshow/75806003.cms?from=mdr

10 See https://economictimes.indiatimes.com/small-biz/sme-sector/msmes-dont-have-the-capacity-to-deal-with-something-unexpected-like-covid-19-suresh-prabhu/articleshow/75485280.cms

11 Read more on https://indianexpress.com/article/opinion/columns/india-economy-npa-covid-19-arvind-subramanian-josh-felman-6400664/

12 See https://scroll.in/article/959045/indias-covid-19-lockdown-may-cause-38-million-job-losses-in-the-travel-and-tourism-industry

13 Alan et al. ( 2020 ). Ongoing research, https://www.youtube.com/watch?v=GGGb9zXHH4g

14 Government of India Ministry of Health and Family Welfare Statistics Division Rural Health Statistics https://main.mohfw.gov.in/sites/default/files/Final%20RHS%202018-19_0.pdf

15 See https://economictimes.indiatimes.com/news/politics-and-nation/india-witnesses-steep-rise-in-crime-against-women-amid-lockdown-587-complaints-received-ncw/articleshow/75201412.cms

16 India's poverty profile, The World Bank‐IBRD‐IDA. Retrieved from https://www.worldbank.org/en/news/infographic/2016/05/27/india-s-poverty-profile

17 Thomas ( 2020 ). See https://scroll.in/article/963284/indias-poor-may-have-lost-rs-4-lakh-crore-in-the-coronavirus-lockdown

18 See https://timesofindia.indiatimes.com/india/how-lockdown-has-been-a-gift-for-river-ganga/articleshow/75569852.cms

19 See https://www.india.com/festivals-events/world-environment-day-2020-positive-impact-of-covid-19-lockdown-on-environment-4047703/

Contributor Information

Ranjan Aneja, Email: ni.ca.huc@ajenanajnar .

Vaishali Ahuja, Email: moc.liamg@oceilahsiav .

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Covid-19: Impact on the Indian economy

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Does the indian financial market nosedive because of the covid-19 outbreak, in comparison to after demonetisation and the gst, how india is dealing with covid-19 pandemic, examining the economic impact of covid-19 in india through daily electricity consumption and nighttime light intensity, twin challenges of covid-19 pandemic and climate change for agriculture and food security in south asia, addressing covid-19 impacts on agriculture, food security, and livelihoods in india, related papers (5).

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Impact of the coronavirus (COVID-19) on the Indian economy - statistics & facts

After reporting its first case in late January 2020 in the southern state of Kerala, India introduced rigorous airport screenings for the coronavirus (COVID-19). The following weeks saw a quick succession of events leading to a suspension of all travel in and out of the country by March 22 that year. While infections continued to increase during this period, Indians were now confined to their homes to contain the spread of the virus. The announcement did not come without chaos – it created widespread panic, specifically among lower classes of society including farmers and migrant workers who were left stranded and jobless overnight from their faraway homes and no mode of transport. Despite the government announcing a relief package of 1.7 trillion rupees , it was clear that a large portion of the country’s population was going to be scouring for livelihoods. Economists slashed GDP rates for the foreseeable future due to the obvious impact of the lockdown. However, it was also estimated that the country might bounce back quickly because its industry composition, with unorganized markets being largely dominant. Losses from organized sectors amounted to an estimated nine trillion rupees in late March, projected to increase with the prolonging of the lockdown. Unsurprisingly, the most affected industries included services and manufacturing, specifically travel & tourism, financial services, mining and construction, with declining rates of up to 23 percent between April and June 2020. Towards the end of 2020, however, India saw some semblance of recovery across certain sectors. This was a result of easing restrictions, controlled infection rates and the festive season between October and November 2020. The pandemic came with uncertainty and implications on all aspects of business across the world. Despite India being ahead of most countries in being able to implement work-from-home measures, specifically in white collar work, job and earning deficits , along with instability in prices was expected. The months of the lockdown resulted in the free fall of employment, which slowly stabilized after the economy steadied in most parts of the country. Segments including consumer retail expected to see sharp falls ranging between three and 23 percent depending on the market. For the big players across segments, this meant operating at less than full capacity to keep afloat. For small businesses , however, it depended on how long they could ride out the storm. Overall, the pandemic changed daily lifestyles drastically . Economic activity started to take a hit yet again since March 2021, as the country faced its second wave of the pandemic . As a result, GDP forecasts were expected to fall, putting losses at over 38 billion U.S. dollars if local lockdowns continued till June 2021. Unprecedented numbers in terms of infections and deaths recorded across the country led to another set of lockdowns in some parts, burdening the healthcare system in the midst of government controversy. International aid in the form of oxygen cylinders, PPE kits, ventilators along with funding was being sent from various countries to what looked like a dire situation. This text provides general information. Statista assumes no liability for the information given being complete or correct. Due to varying update cycles, statistics can display more up-to-date data than referenced in the text. Show more - Description Published by Statista Research Department , Dec 19, 2023

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• Basic Statistic Estimated quarterly impact from COVID-19 on India's GDP FY 2020-2022
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Estimated quarterly impact from COVID-19 on India's GDP FY 2020-2022

Estimated quarterly impact from the coronavirus (COVID-19) on India's GDP growth in financial year 2020 to 2022

COVID-19 impact on estimated income group in India 2021, by type

Coronavirus (COVID-19) impact on estimated income group across India as of April 2021, by type (in millions)

Estimated cost of the coronavirus (COVID-19) lockdown on the Indian economy in 2020 (in billion U.S. dollars)

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Estimated cost of the coronavirus (COVID-19) lockdown in Maharashtra on the Indian economy in April 2021, by sector (in billion Indian rupees)

COVID-19 impact on GDP forecast India FY 2021, by agency

Impact from the coronavirus (COVID-19) on India's GDP growth forecast in financial year 2021, by agency

Impact from COVID-19 on India's exports 2021, by commodity

Impact from the coronavirus (COVID-19) on exports from India in January 2021, by commodity group

Impact from COVID-19 on India's imports 2022, by commodity

Impact from the coronavirus (COVID-19) on major imports into India in April 2022, by commodity group

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COVID-19 impact on rural and urban employment India 2020, by type

Impact of the coronavirus (COVID-19) on rural and urban employment across India in 2020, by type

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Impact on unemployment rate due to the coronavirus (COVID-19) lockdown in India from January 2020 to May 2022

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Impact on job loss and gain due to the coronavirus (COVID-19) lockdown in India between April and July 2020, by age group (in millions)

COVID-19 impact on number of people employed in India 2020-2021

Impact on number of people employed during the coronavirus (COVID-19) lockdown in India between May 2020 and January 2021 (in millions)

Impact on labor participation due to the coronavirus pandemic in India between 2020 and 2022

Employment rate of urban women India 2016-2021

Employment rate of urban women in India from March 2016 to February 2021

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• Basic Statistic Estimated economic impact from COVID-19 on industry in India 2020
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Size of organized market India FY 2019, by sector

Size of the organized market across India in financial year 2019, by sector (in billion Indian rupees)

Estimated impact from the coronavirus (COVID-19) on the industry sector in India from April to December 2020, by type

Estimated impact from the coronavirus (COVID-19) on the service sector in India from 2nd quarter 2020 to 3rd quarter 2021, by type

Estimated economic impact from COVID-19 in India 2020 by market

Estimated impact from the coronavirus (COVID-19) on India in 2020, by market

Impact of COVID-19 on corporate revenues in India Q1-Q2 2020, by sector

Impact of the coronavirus (COVID-19) pandemic on corporate revenues in India in 1st quarter and 2nd quarter 2020, by sector

Problems faced by business due to COVID-19 in India 2020

Problems faced by business due to the coronavirus (COVID-19) in India in 2020

COVID-19 impact on start-up funding in India 2020

The impact of COVID-19 on Indian tech start-ups in different funding stages between April and October 2020

Retail and consumption

• Premium Statistic Reasons for not visiting restaurants after COVID-19 lockdown India 2020
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Reasons for not visiting restaurants after COVID-19 lockdown India 2020

Reasons for not visiting favorite restaurant after the coronavirus (COVID-19) lockdown in India as of May 2020

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Opinion about purchasing items beyond essentials after the coronavirus (COVID-19) lockdown relaxation in India as of May 2020

COVID-19 impact on media consumption India 2020 by type of media

Impact of the coronavirus (COVID-19) on media consumption in India as of March 2020, by type of media

Opinion on online deliveries after COVID-19 lockdown relaxation India 2020

Opinion about permitting e-commerce platforms to deliver all goods after the coronavirus (COVID-19) lockdown relaxation in India as of May 2020

Opinion on impact of COVID-19 lockdown on grocery availability India 2020

Opinion on impact of COVID-19 lockdown on grocery availability in India from March 20, 2020 to May 18, 2020

People engaged in panic buying due to COVID-19 India 2020

Share of people engaged in panic buying due to coronavirus (COVID-19) in India in 2020

Relief and financial aid

• Premium Statistic Value of government aid to combat COVID-19 in India April 2020
• Premium Statistic Impact of government aid to combat COVID-19 in India September 2020
• Premium Statistic Top ten states by number of people fed during COVID-19 lockdown in India 2020
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Value of government aid towards the coronavirus (COVID-19) across India as of May 6, 2020, by type (in billion Indian rupees)

Impact of government aid to combat COVID-19 in India September 2020

Number of people aided by the government relief package towards the coronavirus (COVID-19) across India as of September 9, 2020, by type (in millions)

Top ten states by number of people fed during COVID-19 lockdown in India 2020

Leading states by number of free meals provided by the state/NGO during the coronavirus (COVID-19) lockdown in India as of April 2020 (in millions)

Government shelter homes during COVID-19 in India 2020 by state

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Impact of Covid-19 on Indian economy

The Impact of Covid-19 on Indian Economy

As per the official data released by the ministry of statistics and program implementation, the Indian economy contracted by 7.3% in the April-June quarter of this fiscal year. This is the worst decline ever observed since the ministry had started compiling GDP stats quarterly in 1996. In 2020, an estimated 10 million migrant workers returned to their native places after the imposition of the lockdown. But what was surprising was the fact that neither the state government nor the central government had any data regarding the migrant workers who lost their jobs and their lives during the lockdown.

The government extended their help to migrant workers who returned to their native places during the second wave of the corona, apart from just setting up a digital-centralized database system. The second wave of Covid-19 has brutally exposed and worsened existing vulnerabilities in the Indian economy. India’s $2.9 trillion economy remains shuttered during the lockdown period, except for some essential services and activities. As shops, eateries, factories, transport services, business establishments were shuttered, the lockdown had a devastating impact on slowing down the economy. The informal sectors of the economy have been worst hit by the global epidemic. India’s GDP contraction during April-June could well be above 8% if the informal sectors are considered. Private consumption and investments are the two biggest engines of India’s economic growth. All the major sectors of the economy were badly hit except agriculture. The Indian economy was facing headwinds much before the arrival of the second wave. Coupled with the humanitarian crisis and silent treatment of the government, the covid-19 has exposed and worsened existing inequalities in the Indian economy. The contraction of the economy would continue in the next 4 quarters and a recession is inevitable. Everyone agrees that the Indian economy is heading for its full-year contraction. The surveys conducted by the Centre For Monitoring Indian Economy shows a steep rise in unemployment rates, in the range of 7.9% to 12% during the April-June quarter of 2021. The economy is having a knock-on effect with MSMEs shutting their businesses. Millions of jobs have been lost permanently and have dampened consumption. The government should be ready to spend billions of dollars to fight the health crisis and fast-track the economic recovery from the covid-19 instigated recession. The most effective way out of this emergency is that the government should inject billions of dollars into the economy.

The GDP growth had crashed 23.9% in response to the centre’s no notice lockdown. India’s GDP shrank 7.3% in 2020-21. This was the worst performance of the Indian economy in any year since independence. As of now, India’s GDP growth rate is likely to be below 10 per cent.

The Controller General of Accounts Data for the centre’s fiscal collection indicates a gross-tax revenue (GTR) of rupees 20 lakh crore and the net tax revenue of rupees 14 lakh crore for 2020-21. The tax revenue growth will be 12 per cent, which would mean the projected gross and the net tax revenues for 2020-21 would be rupees 22.7 lakh crore and 15.8 lakh crore respectively.

This suggests some additional net tax revenues to the centre amounting to rupees 0.35 lakh crores as compared to the budget magnitudes. The main expected shortfall may still be in the non-tax revenues and the non-debt capital receipts. If we look down in the past, the growth rate for the non-tax revenues and non-debt capital receipts have been volatile, but if we add them together, they average to a little lower than 15% during the five years preceding 2020-21.

How have different sectors been affected due to Covid-19?

Hospitality Sector:

As many states have imposed localised lockdowns, the hospitality sector is facing a repeat of 2020. The hospitality sector includes many businesses like restaurants, beds and breakfast, pubs, bars, nightclubs and more. The sector that has contributed to a large portion of India’s annual GDP has been hit hard by restrictions and curfews imposed by the states.

Tourism Sector:

The hospitality sector is linked to the tourism sector. The sector that employs millions of Indians started bouncing back after the first wave, but the second wave of covid was back for the devastation! The tourism sector contributes nearly 7% to India’s annual GDP.

It comprises hotels, homestays, motels and more. The restrictions due to the second wave have crippled the tourism sector, which was already struggling to recover from the initial loss suffered by the businesses in 2020.

Aviation and Travel sector:

Aviation and other sector establishments faced a massive struggle during the second wave of the pandemic. The larger travel sector is also taking a hit as people are scared to step out of their homes. For airlines and the broader travel sector, its recovery will depend on whether people in future will opt for such services. At present, the outlook for the aviation and broader travel sector does not look good.

Automobile sector:

The automobile sector is expected to remain under pressure in the near term due to the covid-19 situation in India.

Real Estate and Construction sector:

The real estate and construction activities have started facing a disruption during the second wave as a large number of migrant workers have left the urban areas. The situation has not been grave as of 2020 for this sector.

Fiscal Deficit:

The Covid-19 pandemic has not affected our fiscal deficit and disinvestment target much. In this year’s union budget, Finance minister Nirmala Sitharaman announced a fiscal deficit target of 6.8% for 2021 to 2022. India’s fiscal deficit for 2020-21 zoomed to 9.5% of GDP as against 3.5% projected earlier. Our finance minister has promised to achieve a fiscal deficit of 4.5% of GDP by 2025-26 by increasing the steaming tax revenues through increased tax compliance as well as asset monetization over the years. According to the medium-term fiscal policy statement that the government had presented in February 2020, the fiscal deficit for 2021-22 and 2022-23 was at 3.3% and 3.1% respectively.

The impact of the lockdowns and restrictions:

The extent to which localised lockdowns and restrictions have been imposed in the past have impacted the economic recovery timeliness. There is a scope for sustained fiscal stimulus going throughout the year. To some extent, if credit is made available to businesses at low-interest rates, then monetary stimulus is also possible. The second wave has pushed back India’s fragile economic recovery. Rising inequality and strained household balance sheets have constrained the recovery. From growing only 4% in 2019-20 to contracting  7-8% in 2020-21 to staring at another low economic growth recovery in 2021, India has been virtually stopped in all its tracks. Therefore, fiscal policy must lend a generous helping hand to lead vulnerable businesses and households towards economic recovery.

What is the path to recovery?

If the outbreak worsens over time, or if the case numbers are very high, this would elevate the risk to India’s economic and fiscal recovery. The Indian economy should resume its recovery once the covid waves recede and the Indian economy will continue to grow at a faster pace than its peers at similar levels of per capita income around the world. On the downside, there will be less vigorous recoveries in the government revenues and severe downside scenarios may entail additional fiscal spending. Commodities and the automobile sector are severely affected by the initial stream of infections and associated lockdown measures. It recovered strongly in the second half of 2021.

The recovery in the global economy has made it unlikely that a sharp price decline like 2020 will happen again. The pent up demand in the automobile sector will likely drive a strong recovery when curbs are relaxed as was seen in 2020. The second wave of covid-19 has challenged an otherwise strong recovery for Indian Infrastructure. As consumers strive to maximize their utility, they will maintain earning due to regulated returns, fixed tariffs and quick recovery in demand. Airports are most at risk with international traffic recovery likely delayed by another year. This may impede a strong domestic recovery if the government increases the severity and scope of restrictions on mobility. A strong recovery is needed after a crushing 2020. As the outbreak grew worse the state governments have applied restrictive lockdown measures that halted the budding economic recovery in tracks.

Downgrades are a warning not to take economic recovery for granted. The slow pace of vaccinations is likely to be a burden on India’s economic recovery. The Indian recovery has been vigorous across many sectors particularly in the last quarter of fiscal 2021. Halts to domestic air traffic and subdued international travel have dismantled recovery for airports. The covid wave has hit small and medium-size enterprises particularly hard. It has delayed recovery in banks’ asset quality. Mobility has been down to 50-60% of the normal levels. Therefore, people are staying home more and spending less. Recovery will take hold later this year. India’s budding economic recovery throughout March solidified government revenues.

Power Sector: The Indian power sector will generate huge revenues and it would track the recovery of the GDP of India.

Airports: The second wave has threatened India’s air recovery traffic. The domestic passenger traffic has decreased by 75% of the pre-covid levels. The traffic recovery in the worst-case scenario could be 10% lower than what is predicted. Weaker traffic hits the cash flows of the airports. There will be a sharp recovery in road traffic after a short disruption. The commercial vehicle traffic will see better resilience as it supports logistics and essential services.

Ports: A modest recovery will be witnessed by import volumes. Fertilizers and containers will increase at a greater pace than crude and coal segments.

Operating cash flows will recover most infrastructure and utilities such as water, sewage, dams and natural gas segments. Credit loss will remain high in the fiscal year 2022 at 2.2% of the total loans before it recovers to 1.8% in 2023. India’s strong economic recovery and the steps taken by the central governments and the state government to mitigate the effects of the economic crisis have lessened the burden on the banks. Additionally, banks have raised capitals to strengthen their balance sheets. This will smoothen the hit from covid related losses. The weak consumption accompanied by large scale job losses and the salary cuts in the formal sector may hit the banking sector’s loans and ‘credit card’ loans. This is accompanied by lower recovery rates in the bank’s non-performing assets. That could lead to a rise in weaker loans.

If we have to move towards sustained and real economic growth against v-shaped, k-shaped or w-shaped paths, the states and the centre need to work towards a cooperative strategy through their “cooperative federalism” scheme to increase the vaccination drive.

Last year, the government chose life over livelihoods. By choosing to protect the former, the covid 1.0 was delayed in September and its intensity was much lower than predicted. By January 2021, the government had declared victory over covid-19. The first threat to economic recovery is the regional cases which are resulting in further extension of lockdowns and hence they are limiting the pace of economic recovery. The second threat is the vaccination rates arising from the vaccine supply. Without inoculating a major portion of our labour force, there is a threat that viruses will disrupt our real economy. It is apparent from the worldwide cases of Covid-19.

best article for those who are thinking of starting for new business. thanks for your information i will have a plan for contract business for constru...

many people\'s income also increased during covid , only the poor section of the country has been economically affected badly. could somebody write ...

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Effects of COVID-19 on Tea Plantation Workers in India: Issues of Labour Market Institutions

• RESEARCH NOTE
• Published: 08 June 2024

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• Debdulal Saha   ORCID: orcid.org/0000-0002-3545-653X 1  

This paper discusses the effects of COVID-19-induced pandemic on tea plantation workers during lockdown phases in India. The tea industry, being a labour-intensive, employs around 1.2 million permanent workers who usually reside within the plantations along with their families, making the largest employer in the formal private sector. Drawing from secondary data and narratives from in-depth telephonic interviews with various key informants during and post-lockdown, this study shows that plantation workers faced livelihood crisis due to subsequent lockdowns during both the waves of COVID-19 health crisis. Poor health infrastructure in the tea estates, weak trade union and existing wage determination methods are responsible for livelihood crisis for plantation workers during pandemic. Except state-assisted social assistance benefits in terms of ration, unlike permanent workers of other sectors and industries, regular plantation workers did not even receive compensated wages from the employer during lockdown, following ‘no-wage for no-work’ clause. Ineffective labour market institutions and rigid managementality failed to protect tea plantation workers during the crisis.

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In term of confirmed cases, India stands second globally after the USA. India reports third highest number of deaths after the USA and Brazil.

In India, hospital beds-to-population ratio is 0.7:1000, whereas doctor-to-population ratio is 1:1800 which are way below than the desired level (Paital et al. 2020 ).

India started with ‘people’s curfew’, followed by abrupt nationwide lockdown. Unlike China and Italy, with a few hours’ notice, Government of India announced a complete shutdown of the economy including public transport services such as closing down Indian Railways and inter-state bus services, pushing millions of migrant workers to return home from cities on foot. In fact, Bangladesh which followed similar lockdown strategy like India gave a few days to migrants to return their origins.

It is based on telephonic survey conducted by the United Nations Industrial Development Organization (UNIDO) on 85 enterprises including automotive components, bicycle, paper, textile, ceramic, foundry, tea and rice milling sectors in clusters across the country during 9–13 April 2020 (Berkel 2020 ).

According to Census (2011), there are 454 million internal migrants in India (Rajan 2020 ).

Decent Work for Tea Plantation Workers in Assam: Constraints, Challenges and Prospects (2019) conducted by Debdulal Saha, Chitrasen Bhue, and Rajdeep Singha on behalf of Tata Institute of Social Sciences, Guwahati funded by Oxfam, Germany. Available at: https://tiss.edu/uploads/files/TISS_Study_2019_Decent_Work_for_Tea_Plantation_Workers_in_Assam_Web.pdf

Confidentiality is maintained while presenting data and information provided by participants.

Government of Assam decided to raise by ₹38 on a daily wage for tea plantation workers. For further details, see https://www.newindianexpress.com/nation/2021/may/28/assam-government-decides-to-raise-tea-garden-workers-wage-by-rs-38-2308881.html

Government of West Bengal decided to raise ₹26 on tea wages. For further details, see https://www.telegraphindia.com/west-bengal/bengal-decides-on-15-hike-in-tea-wages/cid/1804316

Based on a telephonic interview with a female tea garden worker from Assam (9 June, 2021).

About 93 per cent of 3552 respondents across various industry groups covering predicted that economy will be restored within a quarter after lockdown indicated in a study conducted by ASSOCHAM ( 2020 ) during lockdown. For further details, see https://www.assocham.org/userfiles/industry.pdf (accessed on 20 June 2021). As per a study conducted by FICCI ( 2020 ), about 42 per cent of the respondents predicted that it will take about 3 months to restore the economy. For further details, see https://ficci.in/ficci-in-news-page.asp?nid=20956 (accessed on 20 June 2021).

As on 30 June 2021, tea production related data for 2021 is available up to March 2021.

For further details, see https://www.statista.com/statistics/642694/average-retail-price-of-tea-india/

Around 210 workers and staff members in two different tea-gardens in Dibrugarh district in upper Assam have been tested positive between 4 and 6 May 2021. Over 150 and 60 workers and staff were tested positive in Zaloni and Mayajan tea estates, respectively, in Dibrugarh. District-wise data in West Bengal (Darjeeling, Jalpaiguri, Alipurduar) show exponential rise in number of COVID cases, whereas cases in West Bengal and India are slowly declining. These are the districts where large numbers of tea estates are located in West Bengal.

It is revealed during telephonic interviews with civil societies across Assam and West Bengal during 5–7 June 2021. One of the female plantation workers was suffering from fever and latter tested COVID positive. Her husband, involved in spraying pesticides and chemicals on the leaves, also subsequently tested COVID positive. When these cases were reported to the estate management, all the workers who were involved in spraying activities were tested positive. Nevertheless, family members of these workers did not undergo testing. These workers and their families are managed by themselves in home isolation. Workers mentioned that such asymptomatic cases might be revealed if mass testing is conducted with them (Telephonic Interview with a worker, 10 June 2021).

Based on a telephonic interview with a worker in Dooars area of West Bengal on 9 June 2021.

It is revealed during interactions with trade union leaders, independent volunteers, and field workers from civil societies who were actively involved during COVID management in the first and second waves.

Based on a telephonic interview with a worker in West Bengal (10 June 2021).

Telephonic interview with a worker in Assam (9 June 2021).

Alcohol is a part of plantation workers’ regular consumption. They categorically refer this as a part of their food habit and culture.

Workers from both in Assam and West Bengal mentioned during telephonic interviews.

Under public distribution system (PDS), workers received 35 kgs of ration which includes rice and flour.

Tea plantation workers from both in Assam and West Bengal were mentioned during telephonic interviews.

Workers mainly depend on sand mining extraction in Dooars areas of West Bengal besides daily casual work. In case of Assam, workers are involved as casual workers in road construction.

During telephonic interview conducted on 9 June 2021, a female plantation worker from West Bengal mentioned about working conditions of plantation workers post-lockdown in 2020.

As per 3 Orders (Memo No. 77-CS/2020 dated 11April 2020; Memo No 138-CS/2020 dated 11 May 2020; Memo No. 218-CS/2020 dated 30 May 2020) issued by Government of West Bengal, operations including plucking in tea garden in allowed with deployment up to 25 per cent, 50 per cent, and 100 per cent of total regular workforce at a time, respectively.

Assam Cha Mazdoor Sangathana (ACMS) demands a hike of ₹50 on a daily wage in Assam but ₹38 increment has increased.

Telephonic interviews with workers were conducted in selected tea estates in Assam and West Bengal to understand their views during 8–12 June 2021.

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Saha, D. Effects of COVID-19 on Tea Plantation Workers in India: Issues of Labour Market Institutions. Ind. J. Labour Econ. (2024). https://doi.org/10.1007/s41027-024-00491-8

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Our future lives and livelihoods: Sustainable and inclusive and growing

As the world economy starts to emerge from the COVID-19 crisis, the time will soon come for leaders to look beyond safeguarding lives and livelihoods  and to set their sights on a more profound challenge: bettering them. This societal challenge might be ten times as big as the pandemic and last ten times as long. The three goals we have in mind—growth, sustainability, and inclusion—buttress one another yet don’t always pull in the same direction; we see powerful reinforcing as well as counteracting loops among them (exhibit). And so, while many might broadly agree on the aspiration, there’s a very tough question lurking in the background: How do we go about building a future that delivers growth and sustainability and inclusion?

Full disclosure: we’re not going to offer an answer. Instead, we propose a way for changemakers in business, government, and society to explore the problem, a mental model that might offer the best chance to reach the answer. It starts with this: we believe the ands are crucial and that they are in fact the means to the end . The three elements of growth, sustainability, and inclusion are deeply connected and cannot be viewed as trade-offs. Consider this: without growth, how could we achieve prosperity and well-being or pay for the transitions needed to make the economy more sustainable and inclusive? Without sustainability, how could we fashion growth for the current generation and the ones to follow? Without inclusion—an opportunity for productive work and a satisfying life for all citizens—how could we ensure the demand needed to propel growth? Indeed, getting to and —moving to a world in which growth and sustainability and inclusion form a powerful dynamic—is the imperative for the next era of business.

But before we get to the challenge of and , let’s face facts: hastening growth, sustainability, and inclusion are incredibly difficult challenges in their own right. Fortunately, thinkers, strategists, activists, and many others around the world—dreamers and doers—are working on it. We are too. In our view, the world will need to confront three problems simultaneously:

• Growth is elusive. In the mature G-7 economies, GDP growth has halved to 1 percent per year on average since the 2008 global financial crisis. 1 World Economic Outlook Database, October 2021, International Monetary Fund, imf.org. It’s the same story in emerging economies: despite some exceptions, such as China and India, growth in emerging economies overall has been lower recently than in the early 2000s.
• Poverty is still endemic, despite the progress made. More than 600 million people still lived in extreme poverty as of 2017. And in 2020, another 100 million or so people joined them as a result of the COVID-19 pandemic. This will persist unless today’s leaders create sufficient jobs with decent wages, as well as a robust social contract that ensures access to affordable housing, healthcare, and energy for the bottom one to three quintiles of the population, depending on the country. Meanwhile, a new threat to personal income is mounting: the rise of technology-driven changes in the ways we work, which the pandemic has accelerated. We estimate that more than 100 million people will need to make occupational transitions  by 2030 in a set of eight advanced and emerging economies.
• Ensuring a sustainable future will require massive investment. For example, the International Energy Agency estimates that net-zero emissions might require investments of almost $5 trillion each year by 2030, and $4.5 trillion per year by 2050. 2 Net Zero by 2050 , International Energy Agency, July 2021, iea.org. The annual bill equates to about half of global corporate profits in 2019, or about one and a half times the annual increase in public debt over the preceding 15 years. Additional investments needed for decarbonization in agriculture, transportation, and other sectors could nearly double the bill. While many of these investments would produce a return, their financing or pricing is not yet set up.

And that’s just the start: as we explain in this article, even if the global economy were to get these three goals notionally right, there are contingencies among them that, if left unresolved, could wreck any progress made.

Here, we seek to frame the debate about achieving sustainable, inclusive growth in a clear-eyed way, laying out the aspiration but also the toughest problems that need to be solved to achieve this growth, with some illustrations as to their size. Good strategy should always start with asking the right questions. For today’s leaders, the questions are vast and profound— and soluble.

Good strategy should always start with asking the right questions. For today’s leaders, the questions are vast, profound— and soluble.

The virtuous cycle starts with growth

What do we mean by sustainable, inclusive growth? There are many ideas associated with these words. We aim for broad rather than narrow interpretations:

• In growth, we include the ambition of increased prosperity and well-being, including economic-profit growth for companies, GDP growth for nations—as well as measures such as life satisfaction for citizens—derived in part from dignity of work (while recognizing that measurable definitions of well-being are still evolving).
• In inclusion, we consider equality of opportunity and broad-based progress of outcomes for all—especially sufficiency of living standards—and the narrowing of inequalities among genders, ages, ethnicities, family backgrounds, and places of residence.
• In sustainability, we aim for environmental resilience, which starts with reducing climate risk but also includes much broader preservation of natural capital as well as intergenerational fairness, all considered in terms of economic and societal costs and benefits.

These three goals are daunting. Fortunately, they can strengthen and reinforce one another:

• Growth supports inclusion, part 1: Creating meaningful jobs and lifting incomes. High-growth emerging economies  have delivered powerful proof that growth supports inclusion, by reducing the global share of those living in extreme poverty by two-thirds—to less than 10 percent of the world’s population—and by welcoming hundreds of millions to the middle class. This applies in advanced economies too: from the early 1990s to 2005, before the global financial crisis, GDP per capita rose by 2 to 4 percent per year and real median household market incomes also rose.
• Growth supports inclusion, part 2: Correcting labor-market inadequacies. In growing economies, government transfers and tax policies can help support incomes for large swaths of the population. Research from the McKinsey Global Institute found that real market incomes were flat or fell  for just 20 to 25 percent of households, after taxes and transfers; before these transfers, some 60 to 70 percent of households saw incomes decline. During the pandemic, while US median household income dropped 2.9 percent in 2020, the share of people living in poverty declined , after accounting for government aid. 3 Income, poverty and health insurance coverage in the United States: 2020, US Census Bureau, September 14, 2021, census.gov.
• Growth enables sustainability by encouraging investment. Economic growth strengthens consumer confidence , spending, and demand, all vital elements of a healthy investment climate—which the energy transition is going to need. And as our research on outperforming emerging economies  has shown, the capital deepening that results from greater investment spurs productivity and, with it, wages and growth.
• Greater inclusion and sustainability promote growth through new demand and investment opportunities. Sustainability drives new business opportunities in domains such as clean technologies. India, for example, could more than quadruple its renewable-energy capacity by 2030 ; we estimate that this could generate some $90 billion in GDP and support about two million jobs in 2030. And inclusion has similarly powerful effects on growth. We estimate that more inclusive access to healthcare could add 0.4 percent to the world’s GDP  growth by 2040. More broadly, inclusion spurs demand, as a burgeoning middle class is a key driver of consumption. Africa has about 200 million young people of working age and will have close to a billion by 2050. Youth training and development, especially of digital skills, can vault this group into the middle class—and help close skill gaps in the rest of the world.
• Sustainability reinforces both inclusion and growth through the ‘energy prize.’ The energy transition will yield a prize of two cross-cutting benefits: lower costs that make energy more accessible, and more productive lives. Over the past ten years, the cost of electricity from renewables fell about 50 to 85 percent . 4 “Majority of new renewables undercut cheapest fossil fuel on cost,” International Renewable Energy Agency, June 22, 2021, irena.org. Renewables are now gaining ground in developing economies. In sub-Saharan Africa, a region with the lowest energy-access rate in the world, decentralized renewable solutions such as rooftop solar are taking root. 5 Jan Corfee-Morlot et al., Achieving clean energy access in sub-Saharan Africa , Organisation for Economic Co-operation and Development, January 31, 2019, oecd.org. Lower emissions and reduced air pollution can improve health and allow more people to participate productively in the economy. History has some instructive lessons: after passage of the Clean Air Act in the United States, in 1970, reduced pollution increased the labor-force participation rate for affected individuals and had a positive long-run impact on wages . 6 Adam Isen, Maya Rossin-Slater, and Reed Walker, “Every breath you take, every dollar you’ll make: The long-term consequences of the Clean Air Act of 1970,” VoxEU, February 19, 2014, voxeu.org.

These three goals—sustainability, inclusion, growth—are daunting. Fortunately they can strengthen and reinforce each other.

Squaring the circle

If only each element of the circle of sustainable, inclusive growth created purely positive reinforcements to the others, the way forward would be clear. But the reality is that sustainability, inclusion, and growth also counteract. Squaring this circle means combating three sets of potential counterforces, which could be just as powerful as the reinforcing loops.

A McKinsey Live event on 'Charting a sustainable, inclusive, and growing future'

Growth’s counteractions

Growth imposes two major challenges. First is the persistent rise in inequality, which could worsen with growth. Already, 70 percent of the global population live in countries where inequality is mounting. Second is rising resource consumption and emissions.

• Growth affects inclusion through skill-biased inequality—and its magnitude is set to rise with trends accelerated by the COVID-19 pandemic. Growth in the knowledge-based economy has stoked demand for higher-level cognitive, technological, and socioemotional skills — a demand not matched by the supply of workers with such skills. As a result, a skill-biased inequality in many countries has sprung up. In the United States, for example, wages for middle-income jobs grew by 1.1 percent between 2000 and 2018, whereas wages for high-pay and low-pay workers grew much faster , at 7.3 and 5.3 percent, respectively. As the pandemic accelerates digitization and automation, almost all growth in labor demand could occur in high-wage occupations . The number of workers who would need to make occupational transitions by 2030 in order to stay employed would increase by up to 25 percent , including—for the first time—many low-wage workers.
• Growth counteracts sustainability through greater resource consumption. The global “material footprint” —that is, the raw materials used to make the goods that we consume—rises in correlation with GDP growth. 7 The Sustainable Development Goals Report 2019 , United Nations, 2019, unstats.un.org. As growth expands in emerging countries, the problem of an increasing global material footprint could get worse. According to the World Bank , about 10 percent of the world’s people still have no access to electricity, and 2.6 billion people lack access to clean cooking solutions. 8 “Report: Universal access to sustainable energy will remain elusive without addressing inequalities,” World Bank press release, June 7, 2021, worldbank.org. If increased demand from a globally expanding consuming class is not accompanied by improvements in resource efficiency, this will put an even heavier burden on the planet.

Sustainability’s counteractions

Trillions in capital are needed for energy investment to achieve the goal of net-zero emissions by 2050. If consumers and businesses shoulder the burden, near-term growth and inclusion could suffer, even though the longer-term benefits are clear. If costs are passed on to consumers, energy prices could rise well before the gains are eventually reaped, and if costs are passed on to businesses, the profitability of whole sectors could suffer.

This dynamic sets up the potential for two counteractions: uneven distribution of impact and a challenge to the goal of inclusion.

• The energy transition could affect some countries and sectors severely. Oil- and natural-gas-producing economies could see their annual per capita income from these products fall by about 75 percent by the 2030s , according to the International Energy Agency. 9 Net Zero by 2050 , International Energy Agency, July 2021, iea.org. Lower-income countries will be disproportionately exposed because they have a higher share of emissions-intensive sectors and will also need to make higher investments relative to their GDP. Those sectors include power, automotive, construction, and others, all of which will be intensely affected, as will supply chains.
• Lower-income households are disproportionately vulnerable. In Europe, recent rises in energy prices—the vanguard of the energy transition—are falling heavily on low-income households, prompting some governments, including in Spain, to provide subsidies . 10 “Spain targets energy firms as European bills surge,” BCC, September 14, 2021, bbc.com. And while the transition could lead to some 18 million more jobs in the green economy , according to International Labour Organization estimates, many people, especially lower-income workers, will need to retrain to qualify for these new jobs. 11 Greening with jobs—World Employment and Social Outlook 2018 , International Labour Organization, May 14, 2018, ilo.org.

Inclusion’s potential counteractions

The positive spillovers of inclusion are indisputable and well documented: greater workforce participation, higher creativity, more capital allocated to children’s needs. However, poorly conceived measures to boost inclusion can have unintended negative consequences that can include distorted product markets, reduced investment, or faster environmental depletion. For example, in developing economies, free or highly subsidized nonvolumetric pricing of electricity used to pump water can lead to groundwater depletion . 12 Bekele Shifraw, “Addressing groundwater depletion: Lessons from India, the world’s largest user of groundwater,” World Bank Independent Evaluation Group, August 23, 2021, ieg.worldbankgroup.org. Efforts to achieve equality can also backfire if they become a box-ticking exercise, or a quota-driven program, which may fail to address the root causes of inequality. As a result, the goal of achieving a fairer workplace or society may not be achieved, and outcomes may even worsen for certain groups.

As in the pandemic, we will need multiple experiments, unprecedented speed in scaling successful ones, and broad participation across actors.

Starting here, starting now: A proposal

Achieving a future that is sustainable and inclusive and growing is so compelling an idea that today’s leaders owe it to future generations to act immediately. Such a feat cannot be left to enlightened self-interest: if it were that easy, the problem would already have been solved. We see six key challenges that will need to be tackled—with success or failure hinging on how effectively these challenges are met.

• How to unlock growth supported by higher productivity of an additional 1.0 to 1.5 percentage points of GDP per year, at a global scale with the same urgency that we have seen during the COVID-19 pandemic?
• How to reduce the transition costs of decarbonization by, say, $500 billion to $1 trillion of the $5 trillion in required spending per year through technological innovation and smart-portfolio choices?
• How to finance and smooth the cost of the energy transition , country by country and sector by sector, in a way that won’t stifle growth?
• How to reskill and re-employ more than 100 million workers who are in stagnating or shrinking occupations as a result of technological change, including the many millions who will likely be displaced by energy transitions?
• How to strengthen the social contract by achieving basic needs for median households , including affordable housing, healthcare, and energy—needs that are unmet for many of these families in both advanced and developing countries—in a way that attracts private-sector innovation and supply?
• How to support the most vulnerable population segments —for example, the poorest one-fifth of the global population—that struggle with access and affordability in areas such as nutrition, water, energy, education, and financial capital?

Answering these six questions would negate the counterforces mentioned earlier and allow the virtuous cycle to flow unimpeded. But important obstacles, linked to incentives, stand in the way. First is what Mark Carney has called “the tragedy of horizons” : today’s leaders collectively need to take action today for returns that will accrue only over time. 13 “Breaking the tragedy of the horizon—climate change and financial stability—speech by Mark Carney,” Bank of England, September 29, 2015, bankofengland.co.uk. Second is the tragedy of the commons: for collective action, especially on environmental sustainability, all invested parties must look past their parochial interests and fight for the common good.

No stakeholder can solve all these problems on their own. A clear road map, with buy-in from others, is paramount, as is a framework of incentives that balance short- and long-term horizons and interests across value-chain elements, economic sectors, countries, and regions. As in the case of the pandemic, tackling these challenges successfully will require multiple experiments, unprecedented speed in scaling successful ones, and broad participation across actors.

Governments will need to orchestrate a resilient transition—to manage risks, smooth costs, and avoid cascading crises in response to actions taken. On the business side, more companies and CEOs will need to enter the arena, to engage deeply in the design of policies, and to contribute their market knowledge. They will need to be open and realistic about the challenges, while also setting ambitious goals to create positive impact for their customers, workforces, societies, and the environment. Their capacity for innovation can and must be harnessed to shift the frontier of what’s possible and to help achieve what may seem unachievable. If companies don’t engage well and honestly, younger generations of workers will hold them accountable.

When it comes to achieving sustainable, inclusive growth, it is crucial first to fully recognize both the reinforcing as well as the counteracting loops. Then the conversation must move from agreeing on the targets—for who would not agree to such a tantalizing vision—to understanding how to solve the tough problems that stand in the way.

For our part, we have put our hypotheses on those problems at the top of our research agenda and look to learn even more from the leaders of the global organizations we work with who are “making a dent in the universe” through sustainable, inclusive growth. We hope that the ways in which we’ve sketched out the forces and counterforces here contributes to our collective understanding. With that, it may be possible to start to move toward a sustainable and inclusive and growing global economy.

If we don’t focus on the and , we won’t achieve the end.

The authors wish to thank Peter Gumbel and Daniel Pacthod for their contributions to this article. This is the first in a series of articles devoted to sustainable and inclusive growth.

This article was edited by Mark Staples, an executive editor in the New York office.

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