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The recent coronavirus pandemic has forced many businesses and industries to stop their activities until society can start resuming a normal life again. This, in turn, is causing an economic impact on most countries. Customize our latest template to present your data on this subject.

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Coronavirus (COVID-19) - economic impact in India

Statistics report on the economic impact of the coronavirus (COVID-19) pandemic in India

This report presents the most important information on the effects of the coronavirus (COVID-19) in India . It delves into the impact on the country's GDP and other key indicators. Information on the virus and lockdown's impact on employment, businesses, retail and consumption and lifestyles is also curated. Details about relief and financial aid is also provided. For further information about the coronavirus (COVID-19) pandemic, please visit our dedicated Fact and Figures page .

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Table of contents, key indicators.

• Basic Statistic Estimated quarterly impact from COVID-19 on India's GDP FY 2020-2022
• Premium Statistic COVID-19 impact on estimated income group in India 2021, by type
• Premium Statistic Estimated cost due to COVID-19 on economy in India 2020
• Premium Statistic Estimated economic cost of Maharashtra COVID-19 lockdown India 2021, by sector
• Premium Statistic COVID-19 impact on GDP forecast India FY 2021, by agency
• Premium Statistic Impact from COVID-19 on India's exports 2021, by commodity
• Premium Statistic Impact from COVID-19 on India's imports 2022, by commodity
• Premium Statistic COVID-19 impact on rural and urban employment India 2020, by type
• Premium Statistic COVID-19 impact on unemployment rate in India 2020-2022
• Premium Statistic COVID-19 impact on jobs in India 2020, by age group
• Premium Statistic COVID-19 impact on number of people employed in India 2020-2021
• Premium Statistic COVID-19 impact on labor participation rate in India 2020-2022
• Premium Statistic Employment rate of urban women India 2016-2021
• Premium Statistic Size of organized market India FY 2019, by sector
• Basic Statistic Estimated economic impact from COVID-19 on industry in India 2020
• Basic Statistic Estimated economic impact from COVID-19 on services in India Q2 2020-Q3 2021
• Premium Statistic Estimated economic impact from COVID-19 in India 2020 by market
• Premium Statistic Impact of COVID-19 on corporate revenues in India Q1-Q2 2020, by sector
• Premium Statistic Problems faced by business due to COVID-19 in India 2020
• Premium Statistic COVID-19 impact on start-up funding in India 2020

Retail and consumption

• Premium Statistic Reasons for not visiting restaurants after COVID-19 lockdown India 2020
• Basic Statistic Opinion on shopping for non-essentials after COVID-19 lockdown relaxation India 2020
• Basic Statistic COVID-19 impact on media consumption India 2020 by type of media
• Basic Statistic Opinion on online deliveries after COVID-19 lockdown relaxation India 2020
• Premium Statistic Opinion on impact of COVID-19 lockdown on grocery availability India 2020
• Basic Statistic People engaged in panic buying due to COVID-19 India 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
• Basic Statistic Government shelter homes during COVID-19 in India 2020 by state

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Getting ahead of coronavirus: Saving lives and livelihoods in India

The COVID-19 pandemic is the defining global health crisis of our time and the greatest global humanitarian challenge the world has faced since World War II. The virus has spread widely, and the number of cases is rising daily as governments work to slow its spread. India has moved quickly, implementing a proactive, nationwide, 21-day lockdown, with the goal of flattening the curve and using the time to plan and resource responses adequately.

Along with an unprecedented human toll, COVID-19 has triggered a deep economic crisis. The global economic impact could be broader than any that we have seen since the Great Depression. 1 In the full briefing materials accompanying Matt Craven, Linda Liu, Mihir Mysore, Shubham Singhal, Sven Smit, and Matt Wilson, “ COVID-19: Implications for business ,” March 2020, McKinsey’s estimates of the global economic impact of COVID-19 suggest that global GDP in 2020 could contract at 1.8 percent and 5.7 percent in scenarios A3 and A1, respectively. This means that India will face a corresponding shrinkage in global demand for its exports in addition to its domestic-production and -consumption challenges. To understand the probable economic outcomes and possible interventions, McKinsey spoke with more than 600 leaders, including senior economists, financial-market experts, and policy makers, in 100 companies across multiple sectors. Based on these inputs, we modeled estimates for three economic scenarios in India (Exhibit 1). 2 The economic scenarios for India are broadly based on McKinsey’s global scenarios in “ COVID-19: Implications for business ,” March 2020, tailored to the Indian situation. All estimates are directional rather than accurate projections or forecasts, and they will evolve over time with new data, inputs, and analysis.

In scenario 1, the economy could contract by about 10 percent in the first quarter of fiscal year 2021, with GDP growth of 1 to 2 percent in fiscal year 2021. In this scenario, the lockdown would be relaxed after April 15, 2020 (when the 21-day deadline is due to expire), with appropriate protocols put in place for the movement of goods and people after that. Our economic modeling suggests that even in this scenario of relatively quick rebound, the livelihoods of eight million workers, including many who are in the informal workforce, could be affected. In other words, eight million people could have their ability to subsist and afford basic necessities, such as food, housing, and clothing, put at severe risk. And with corporate and micro-, small-, and medium-size-enterprise (MSME) failure, nonperforming loans (NPLs) in the financial system could rise by three to four percentage points of loans. The amount of government spending required to protect and revive households, companies, and lenders could therefore be in the region of 6 lakh crore Indian rupees (around $79 billion), or 3 percent of GDP.

In scenario 2, the economy could contract sharply by around 20 percent in the first quarter of fiscal year 2021, with –2 to –3 percent growth for fiscal year 2021. Here, the lockdown would continue in roughly its current form until mid-May 2020, followed by a very gradual restarting of supply chains. This could put 32 million livelihoods at risk and swell NPLs by seven percentage points. The cost of stabilizing and protecting households, companies, and lenders could exceed 10 lakh crore Indian rupees (exceeding $130 billion), or more than 5 percent of GDP.

Scenario 3 could mean an even deeper economic contraction of around 8 to 10 percent for fiscal year 2021. This could occur if the virus flares up a few times over the rest of the year, necessitating more lockdowns, causing even greater reluctance among migrants to resume work, and ensuring a much slower rate of recovery.

Robust measures to stabilize and support households, businesses, and the financial system

Assuming scenario 2 plays out, the potential economic loss in India would vary by sector, with current-quarter output drops that are large in sectors such as aviation and lower in sectors such as IT-enabled services and pharmaceuticals (Exhibit 2). Current-quarter consumption could drop by more than 30 percent in discretionary categories, such as clothing and furnishings, and by up to 10 percent in areas such as food and utilities. Strained debt- service-coverage ratios would be anticipated in the travel, transport, and logistics; textiles; power; and hotel and entertainment sectors.

There could be solvency risk within the Indian financial system, as almost 25 percent of MSME and small- and medium-size-enterprise (SME) loans could slip into default, compared with 6 percent in the corporate sector (although the rate could be much higher in aviation, textiles, power, and construction) and 3 percent in the retail segment (mainly in personal loans for self-employed workers and small businesses). Liquidity risk would also need urgent attention as payments begin freezing in the corporate and SME supply chains. Attention will need to be given to the liquidity needs of banks and nonbanks with stretched liquidity-coverage ratios to ensure depositor confidence.

Given the magnitude of potential unemployment, business failure, and financial-system risk, a comprehensive package of fiscal and monetary interventions may need to be planned, keeping scenario 2 in mind. This might be triggered progressively as situations evolve and as actions are taken to move to the more favorable scenario 1 through effective public-health measures and graded lockdowns.

Further fiscal-, monetary-, and structural-measure possibilities

Several measures have already been announced to provide liquidity, limit the immediate NPL impact, and ease personal distress for needy households in India. These amount to around 0.8 percent of GDP. Additional measures could be considered to the tune of 10 lakh crore Indian rupees, or more than 5 percent of GDP in fiscal year 2021. All the estimated requirements may not necessarily be reflected in the fiscal deficit of the current year—for example, some support may be structured as contingent liabilities that only get reflected when they devolve. However, a package of this order of magnitude may be essential in supporting those dealing with the possible steep declines in aggregate demand and in protecting the financial system from the possible solvency and liquidity risks arising from stressed companies if scenario 2 or scenario 3 plays out.

Household demand could then be boosted beyond the support provided to needy households that the Indian government has already announced. Consideration could be given to an income-support program in which the government both pays for a share of the payroll for the 60 million informal contractual and permanent workers linked to companies and provides direct income support for the 135 million informal workers who are not on any form of company payroll. India’s foundational digital-identity infrastructure, Aadhaar, enables effective mechanisms for direct support, including through the Pradhan Mantri Jan-Dhan Yojana (PMJDY) and Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) programs and to landless Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) beneficiaries. Concessions for home buyers, such as tax rebates for a time-bound period, could stimulate the housing market and unlock the job multiplier.

For bankruptcy protection and liquidity support, MSMEs could receive liquidity lines from their banks, refinanced by the Reserve Bank of India and a loan program for first-time borrowers could be administered through SIDBI. 3 Small Industries Development Bank of India. Substantial credit backstops from the government could be instituted for likely new NPLs Timely payments to MSMEs by large companies and governments could be encouraged by promoting bill discounting on existing platforms.

For large corporations, banks could be allowed to restructure the debt on their balance sheets, and procedural requirements for raising capital could be made less onerous. The Indian government could consider infusing capital through a temporary Troubled Asset Relief (TARP)-type program (such as through preferred equity) in a few distressed sectors (such as travel, logistics, auto, textiles, construction, and power), with appropriate conditions to safeguard workers and MSMEs in their value chains. Banks and nonbanks may also require similar measures to help strengthen their capital, along with measures to step up their liquidity and the liquidity in corporate-bond and government-securities markets.

To manage the macroeconomic consequences of a large stabilization package, the government would also need to consider clearly communicating to the markets and population that these measures are deep but temporary. Given that India’s fiscal resources are constrained, the Reserve Bank of India may need to finance a portion of such incremental government spending. The spending could be tracked as a COVID-19 portion of the budget to boost transparency. The inflationary effects may be low, as lockdowns severely constrict demand and the fiscal support provided would be a substitute for expenditure rather than additional stimulus. Price increases could, however, occur in some sectors, such as food, so appropriate steps would be needed to maintain harvests and keep the food supply chain operating smoothly.

Overall, devising a credible, systemwide, stabilization package would benefit from being executed in a timely fashion so it can influence the pace of recovery and help avoid severe damage to livelihoods, the economy, the financial sector, and society. Many global economies are also facing these issues and having to put in place their own stabilization packages, with similar intent.

Following the first wave of stabilization measures, attention could shift to implementing the structural reforms needed to increase investment and productivity, create jobs quickly, and improve fiscal health. This could mean introducing further reforms in infrastructure and construction and accelerating investments in health, affordable housing, and other urban infrastructure. States could accelerate spending, and institutions such as NIIF 4 National Investment and Infrastructure Fund. could deploy domestic and long-term foreign capital faster. Such reforms could also enable Make in India sectors to become globally competitive and boost exports (such as electronics, textiles, electric vehicles, and food processing), strengthen the financial sector, deepen household financial savings and capital markets, and accelerate asset monetization and privatization to raise resources.

Emergence from lockdown, safeguarding both lives and livelihoods

Countries that are experiencing COVID-19 have adopted different approaches to slow the spread of the virus. Some have tested extensively, carried out contact tracing, limited travel and large gatherings, encouraged physical distancing, and quarantined citizens. Others have implemented full lockdowns in cities with high infection rates and partial lockdowns in other regions, with strict protocols in place to prevent infections.

The pace and scale of opening up from lockdown for India may depend on the availability of the crucial testing capabilities that will be required to get a better handle on the spread of the virus, granular data and technology to track and trace infections, and the build-up of healthcare facilities to treat patients (such as hospital beds by district). In parallel, protection protocols, cocreated with industry, could be designed for different settings (such as mandis [rural markets], construction sites, factories, business-process-outsourcing [BPO] companies, urban transit, and rural–urban labor movement). As an example, industrial areas (such as Baddi, Vapi, and Tirupur) could be ring-fenced and made safe, with local dormitories set up for the labor force and minimal, controlled movement in and out of the site allowed. There could be on-site testing at factories and staggered shifts for workers. While the principles may be the same for construction sites and BPO companies, the specifics would differ.

A geographic lens could be overlaid to determine how quickly the lockdown could be lifted when new protection protocols are in place. Red, yellow, and green zones could be earmarked based on unambiguous criteria, with clear rules for economic activity, entry, and exit. The classification of areas could be updated frequently as the situation evolves. The definition of a “zone” would need to be granular (such as by ward, colony, and building cluster) to allow as much economic activity as is safely possible while targeting infection as accurately as possible. Since there is a very real possibility of the virus lingering on through the year, this microtargeting approach could help decelerate its spread while keeping livelihoods going.

The alternative approach of opening up select industry chains would be less feasible, given that sectors are tightly intertwined. A textile-export factory, for instance, would require chemicals for processing, paper and plastic for packaging, spare parts for its sewing machines, and consumables such as thread. Segregating industrial establishments by size would also be difficult, since smaller suppliers are often bound to the larger manufacturers.

Actions would need to be implemented locally, with different approaches for districts based on their characteristics (such as rural versus urban, industrial versus service oriented, strong versus weak healthcare infrastructure, and heavily infected versus not infected yet). India could consider using the last week of the current lockdown to gear up for local execution, equipping more than 700 of the most appropriate government officers with insights gained from across the world and from ongoing efforts in cities such as Mumbai and states such as Kerala, which are currently fighting the pandemic.

As part of a set of options to consider, based on prior lessons learned in India from repurposing and redeployment of needed skills and expertise for nationwide efforts, such as after floods and natural calamities, these officers could potentially be deputed to work with the district magistrates (DMs) in each district. They could cooperate in dynamically developing and helping execute locally tailored healthcare-expansion efforts, local- or state-level lockdown timetables, and back-to-work protocols. The DMs and deputized officers in districts could potentially be supported by cross-functional centers of excellence (COEs) in states or at the center. These COEs would have medical, administrative, social, economic, and business experts using their considerable knowledge to collect best practices, conduct rapid analysis, and provide valuable suggestions and recommendations to the districts to ensure high-quality implementation.

It is imperative that society preserve both lives and livelihoods. To do so, India can consider a concerted set of fiscal, monetary, and structural measures and explore ways to return from the lockdown that reflect its situation and respect that most important of tenets: the sanctity of human life.

Rajat Gupta is a senior partner and Anu Madgavkar is a partner in McKinsey’s Mumbai office.

The authors wish to thank the leaders of McKinsey India, particularly Kanmani Chockalingam, Vikram Kapur, Alok Kshirsagar, Akash Lal, Renny Thomas, and Hanish Yadav, for their contributions to this article. They also wish to thank Rakesh Mohan—a senior fellow at Yale University’s Jackson Institute for Global Affairs, external adviser to McKinsey Global Institute, and former deputy governor of the Reserve Bank of India—for his contributions to this article.

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Effects of the COVID-19 pandemic in India: An analysis of policy and technological interventions

a Economics Indian Institute of Technology, New Delhi, India

Seema Sharma

b Indian Institute of Technology, New Delhi, India

Smita Kashiramka

Following a surge in cases of coronavirus disease 2019 (COVID-19) in June 2020, India became the third-worst affected country worldwide. This study aims to analyse the underlying epidemiological situation in India and explain possible impacts of policy and technological changes.

Secondary data were utilized, including recently published literature from government sources, the COVID-19 India website and local media reports. These data were analysed, with a focus on the impact of policy and technological interventions.

The spread of COVID-19 in India was initially characterized by fewer cases and lower case fatality rates compared with numbers in many developed countries, primarily due to a stringent lockdown and a demographic dividend. However, economic constraints forced a staggered lockdown exit strategy, resulting in a spike in COVID-19 cases. This factor, coupled with low spending on health as a percentage of gross domestic product (GDP), created mayhem because of inadequate numbers of hospital beds and ventilators and a lack of medical personnel, especially in the public health sector. Nevertheless, technological advances, supported by a strong research base, helped contain the damage resulting from the pandemic.

Conclusions

Following nationwide lockdown, the Indian economy was hit hard by unemployment and a steep decline in growth. The early implementation of lockdown initially decreased the doubling rate of cases and allowed time to upscale critical medical infrastructure. Measures such as asymptomatic testing, public–private partnerships, and technological advances will be essential until a vaccine can be developed and deployed in India.

Public interest summary

The spread of COVID-19 in India was initially characterized by lower case numbers and fewer deaths compared with numbers in many developed countries. This was mainly due to a stringent lockdown and demographic factors. However, economic constraints forced a staggered lockdown exit strategy, resulting in a spike in COVID-19 cases in June 2020. Subsequently, India became the third-worst affected country worldwide. Low spending on health as a percentage of gross domestic product (GDP) meant there was a shortage of hospital beds and ventilators and a lack of medical personnel, especially in the public health sector. Nevertheless, technological advances, supported by a strong research base, helped contain the health and economic damage resulting from the pandemic. In the future, measures such as asymptomatic testing, public–private partnerships, and technological advances will be essential until a vaccine against COVID-19 can be developed and rolled-out in India.

Introduction

The coronavirus disease 2019 (COVID-19) pandemic has posed an unprecedented challenge to the people and governments of every country in a very short period since its emergence in Wuhan, China, in December 2019 [1] . The first case of COVID-19 in India was reported on 30 January 2020 in the state of Kerala; this was a student who returned from Wuhan and tested positive for COVID-19, following which aggressive contact tracing followed by 14-day home quarantine for suspected cases were enforced [2] . The state remained on high alert. During March, cases began to be reported across India. Despite the aggressive measures taken by the Indian government to prevent and contain the epidemic, as of 12 August 2020 there were 652,473 active cases, 1,695,860 recovered cases, and 47,138 deaths due to COVID-19 [3] .

India is the world's second-most populous and the third-worst affected country by COVID-19 to date (in terms of the total number of confirmed COVID-19 cases). Therefore, it is relevant to review how the country has fought the pandemic since its onset. Against this backdrop, the focus of this paper is to assess the impact of public policy and technological interventions on COVID-19 trends in India. First, India's diverse demographic profile followed by the status of health and hospital infrastructure prior to the COVID-19 pandemic are presented. Second, the impact of the pandemic on India and the measures taken by the government in response are discussed. Third, the technological advances that catalysed the overall recovery process are summarised. Finally, the economic impact of the pandemic is presented, followed by concluding observations with regards to the impact of these measures, their limitations and the way forwards.

Country description

Country and health system overview.

India comprises 28 states and 8 union territories. Table 1 [4] , [5] , [6] , [7] , [8] shows that despite a huge population, the old-age dependency ratio and life expectancy in India are lower than the Organization for Economic Co-operation and Development (OECD) average of 0.264 and 80.7 years, respectively [9] . The current health expenditure in India as a percentage of gross domestic product (GDP) is one of the lowest in the world, which has left the country with insufficient doctors, nurses and beds to face an unprecedented situation such as a pandemic. Social distancing is a key part of tackling the spread of COVID-19, but a high population density can make social distancing challenging. Furthermore, more than half of the elderly population in India has co-morbidities, e.g. hypertension and diabetes, which could potentially increase these individuals’ risk of contracting COVID-19. However, India's median age reflects the fact that more than half of the country's population comprises the young, thereby lowering the anticipated fatality rates from COVID-19.

Overview of the demographics and the health system in India.

A health-system overview is critical for tracking the diverse demographic and health indicators across the country (see Table 2 ) [10] , [11] , [12] . Population density exhibits extreme variations, from 123 individuals per km 2 in Himachal Pradesh to 1106 individuals per km 2 in Bihar. The percentage of the population aged 60 years or more varies from 6.7% in Jharkhand to 12.9% in Kerala. Furthermore, the average life expectancy varies from 63.6 to 72.2 years and is higher for females than males. These variations result from the jurisdiction for health being decentralized, with states having the power to allocate health budgets. Health expenditure as a percentage of GDP is as high as 2.21% in Assam and as low as 0.60% in Maharashtra, even though the population of Maharashtra is 3.5 times that of Assam.

An overview of the health system in India by state.

Differences in health spending result in major variations in health infrastructure in terms of hospitals, beds, ventilators, etc. across the states. For example, Jharkhand and Kerala have comparable populations but the number of hospitals, beds and ventilators in the public sector varies by almost 3.5 times (see Table 3 ) [ 6 , 13 , 14 ]. A visible mismatch between medical infrastructure supply and demand in the public sector will pose a big challenge to deal with the increasing number of cases across the country under the prevailing situation.

An overview of private versus public health infrastructure in India by state.

Healthcare financing in India is a mix of public and private schemes; however, at least 75% of the population has no kind of insurance cover [15] . Furthermore, the private sector provides 58% of hospitals and 81% of doctors in India [16] . During the early days of the pandemic, public hospitals were involved in the testing and treatment of COVID-19. Insufficient public health infrastructure together with a surge in cases called for a policy revision in terms of participation of the private sector in testing and treatment for COVID-19. The public sector accounts for around 20% of the total healthcare expenditure in India, representing around 1% of GDP, one of the lowest proportions of any country in the world [17] . The remaining 80% contributed by the private sector is targeted towards financing and the creation of infrastructure facilities. While diagnosis and treatment were free for 500 million beneficiaries of the health insurance scheme ‘Ayushman Bharat’ in public hospitals, the costs of tests (USD 44) and treatment were capped at private facilities. For example, the Delhi government capped isolation facilities at USD 160–200 per day for isolation beds, USD 260–350 per day for an ICU bed without a ventilator, and USD 300–360 per day for an ICU bed with a ventilator [18] .

Changes due to COVID-19

Other changes in India included contingency plans for an anticipated surge in cases. Railway coaches (2,500) were converted to isolation wards, making available an additional capacity of 40,000 beds [19] . Paramedical staff, including volunteers, ex-service people, homeopathic and ayurvedic practitioners, medical students, teachers, doctors (including retired doctors), and others, were identified at municipal, district and state levels to create an online data pool of 15,896,093 human resources for various activities required to fight COVID-19; each person was designated a ‘COVID warrior’, and a surveillance policy of one COVID warrior per 250 citizens was devised [20] . With the increased supply of infrastructure and human resources, it was equally important to match the demand for medical equipment and medicines. With the involvement of private hospitals, the demand for personal protective equipment (PPE) increased.

Zonal classification

Geographical areas within a city were classified as red (more than 15 confirmed cases on a given day), orange (up to 15 confirmed cases), or green (no cases) zones, based on levels of infections [21] . Containment zones were geographical areas where a cluster of confirmed cases (more than six) was found, especially in cramped locations where social distancing was not realistically possible. Specific guidelines in these areas include:

• • Entry only after a taking COVID-19 preventive drug.
• • Designated helpline numbers for the delivery of essential items, sanitisation drives, and health check-ups.
• • Restricted movement to other zones, with violators booked under sections of the Disaster Management Act (2005), the Epidemic Diseases Act (1897), and the Indian Penal Code (IPC).
• • Zones were reassessed within four weeks from the discharge of the last confirmed case.

This concept of zonal classification was based on the steep learning curve experienced during the 1918 influenza A virus (H1N1) pandemic in India. One of the lessons learned during this earlier pandemic was that even though the spread of a virus among the Indian population could be high, it is unlikely to affect all parts of the country uniformly [22] .

COVID-19 trends

Overview of data availability and data transparency.

State governments usually report COVID-19 data based on daily numbers of confirmed, deceased, recovered and active cases. The major channels for disseminating official data included the Ministry of Health and Family Welfare (MoHFW), the Aarogya Setu Mobile application, press conferences, and the COVID-19 India website [23] , which was developed by a group of volunteers. Table 4 [23] provides an overview of the growth rate of the epidemic during different phases of the mitigation strategies.

COVID-19 spread during subsequent lockdowns in 2020.

Fig. 1 [23] shows the top-ten states with the highest tally of confirmed cases (up to 12 August 2020). Maharashtra emerged as the epicentre of the virus, with clusters of infections in Asia's biggest slum, ‘Dharavi’. Although Telangana and Gujarat reported a similar percentage of confirmed cases, Gujarat reported a higher percentage of deaths. New Delhi had a lower percentage of confirmed cases than Karnataka but reported a higher percentage of deaths. These differences reflect differences in technological expertise and medical facilities across states.

State-wise share of COVID-19 confirmed cases and deaths (2020).

Trends in COVID-19 cases, deaths and recoveries

Fig. 2 [3] depicts the impact of various unlock phases on the increase in the number of new cases. It should be noted that until the end of phase 4, the trend was linear. However, during unlock phase 5, the trend resembled an exponentially increasing curve tapering off during unlock phase 6 (R 2  = 88.57%). It was observed that during this time, the recovery rate was constantly increasing (see Fig. 3 ) [3] , with less than 1% of confirmed cases on ventilators, less than 2% in ICUs and less than 3% in oxygen beds [24] . The growth in recovery rates started matching the growth in confirmed cases, possibly due to a better understanding of the nature and treatment of a novel disease from a technological perspective.

New cases of COVID-19 in India during 2020.

Trends in confirmed, recovered and deceased cases of COVID-19 (cumulative) during 2020.

The case fatality rate (CFR), when comparing the top-three worst-affected countries (in terms of the total number of confirmed COVID-19 cases) shows that India's CFR (see Fig. 4 ) [3] was much lower [25] . This could possibly be attributable to demographic factors, such as a relatively young population, the effectiveness of an early lockdown [26] , a possible inverse correlation between Bacille Calmette–Guérin (BCG) immunization and COVID-19 incidence and severity [27] , missing data from untested deceased patients, or the temperature and humidity [28] . A slight increase in CFR during March 2020 was possibly due to states initiating the process to have their statistics audited by Death Audit Committees (DAC). A written explanation for any delay in reporting COVID-19 fatalities was mandated, to prevent any underreporting of actual numbers.

COVID-19 case fatality rate in the three worst-affected countries during 2020.

State-wise evolution of COVID-19

The state-wise evolution of the spread of COVID-19 during the first 100 days of the epidemic is shown in Fig. 5 [23] , showing that the evolution of the disease differed across states. Kerala received accolades from the United Nations while leading India's early response to this pandemic [29] . The curve for Kerala was almost linear until day 40 after an initial spike in cases.

Evolution and spread of COVID-19 across states during the first 100 days.

Kerala ranks first in the overall health index [30] , where public initiatives in health went hand in hand with private partnerships to fight COVID-19 [31] . A highly responsive and robust healthcare model started systematically preparing to handle a possible outbreak in January 2020. Kerala launched the ‘Break the Chain’ campaign as a means to highlight the importance of hygiene (handwashing) and social distancing. Standard operating procedures covered aggressive contact tracing; infection control for ambulances; careful management of biomedical waste and handling the spillage of body fluids; disinfection and sterilisation; management of dead bodies; use of PPE; and sample collection and transportation. Transparency in communication was maintained, in the form of reporting daily confirmed cases, revised guidelines related to quarantine, hospital admissions, and discharged cases. Additionally, the state undertook total financial responsibility for testing and treatment. However, during July, Kerala witnessed a sudden surge in COVID-19 cases, largely due to the easing of lockdown restrictions and an influx of migrants from other states and from abroad [32] . As a result, there was a sharp increase in the percentage of locally transmitted cases (contacts of the imported cases) [33] . During this time, the scale of testing was unable to match the scale of migrants, thereby delaying the contact tracing and treatment protocol. Additionally, the use of rapid antigen tests (with low accuracy) [59] possibly reduced the reliability of results [34] .

Age and sex trends

COVID-19 is more likely to infect the male population in India, with the highest percentage of cases in males aged 30 to 39 years (see Fig. 6 ) [35] . In the absence of specific COVID-19 statistics based on comorbidities, patients with diabetes, chronic kidney disease, hypertension, and heart disease have been considered at risk [36] . The male population aged more than 60 years accounts for the majority of deaths (see Fig. 7 ) [35] .

The percentage of confirmed COVID-19 cases by age group.

The percentage of deaths from COVID-19 by age and sex.

Policy and technology road map

Policy mandates.

For any country to make a rapid recovery from the effects of the pandemic, it is imperative to investigate the role of policy and technological changes. Tables 5a [37] , ​ ,5(b) 5 (b) [37] and ​ and5(c) 5 (c) [38] list government policies across India and by sector.

Government policies in response to the COVID-19 pandemic.

Interventions introduced across industries in response to the COVID-19 pandemic.

Amendments in medical export policy.

Table 5b shows that during March and April, schools planned to roll-out online learning, both in terms of formulating online content and upgrading their information technology (IT) infrastructure. The objective of opening liquor shops during phase 3 was to replenish state revenues through excise duty on liquor, which comprises between 10% and 15% of their tax revenue. The resumption of selected economic activities indicated a staggered lockdown exit strategy. From Phase 4 onwards, the responsibility for unlock policies was transferred to the state level, as the spread of disease varied across states.

India's pharmaceutical industry, which is third largest in the world by volume, sources the majority of its active pharmaceutical ingredients from China [40] . This supply was affected owing to the virus outbreak in China. Hence, during the initial phases of lockdown, Indian exports were prohibited or restricted to maintain an undisrupted supply chain for the nation, as shown in Table 5c . However, following a tremendous increase in indigenous manufacturing capacity, medical exports began opening up again during July.

Economic relief measures taken by the Indian government

Within a month of lockdown, the unemployment rate in India increased dramatically, from 8.7% in March to 23.52% in April 2020 (see Fig. 8 ) [42] . This resulted in job losses for an estimated 140 million people and an income drop for more than 45% of households [43] . As evident from Fig. 8 , the unemployment rate started to decline again after May because of the reopening of industries and other commercial activities and almost reached pre-COVID-19 levels. Relief measures were announced through different modes, via the central bank or existing schemes; however, they had limited social coverage considering the duration of lockdown (see Table 6 ) [44] . The Reserve Bank of India (RBI; central bank) eased the burden of loan payments by allowing companies to make late repayments. Schemes were launched to provide cash and essential items to vulnerable families. A stimulus package was announced, in four tranches, for small businesses and farmers.

The unemployment rate in India during the COVID-19 pandemic.

Economic relief measures introduced by the Indian government (pre-COVID-19 peak).

Technological advances

India is among the largest manufacturers of vaccines in the world and was the fifth country to isolate the strain of SARS-CoV-2, the virus that causes COVID-19 [45] . India could play an important role in terms of mass-producing a vaccine at an affordable cost [46] . Out of seven Indian firms racing to develop a vaccine, two had vaccine candidates already in the human trial phase as of August 2020 [46] . Around 12 August, India's proportion of recovered COVID-19 cases of 70%, shown in Fig. 9 [3] , was higher than the average (69%) of the top-five countries (by total number of COVID-19 confirmed cases), representing more than 1.6 million [3] recovered cases in absolute terms. This was testimony to the technological advances applied at scale against the backdrop of lockdown measures. Furthermore, research advances, in the form of scaling-up of convalescent plasma therapy, where blood from individuals who have recovered from COVID-19 is given to other infected individuals to help them recover [47] , gave an impetus to the treatment process.

Bench-marking the recovery rate from COVID-19 in India versus the top-five COVID-19 affected countries (2020).

Technological advances can be categorised into three broad categories based on testing, tracing and treatment. As shown in Table 7 , many of the technological initiatives were ‘significant’ in type. The introduction of the world's cheapest COVID-19 testing kit in India was expected to change the paradigm of testing in the country both in terms of scale and cost. Lower cost kits facilitate more tests per million population. Existing drugs and alternative therapies [ 48 , 49 ], produced encouraging results. Furthermore, India increased its manufacturing capacity to 0.45 million PPE coveralls (second-largest manufacturer in the world) and 0.20 million N-95 masks every day, which means better availability of medical coveralls in the future [50] . The launch of the Aarogya Setu app at an all India level for contact tracing was followed by the launch of specialized apps at the state level to fill in the information gap in terms of occupancy and availability of hospital beds, ICUs and ventilators for patients with COVID-19 [51] , [52] , [53] .

Technological initiatives initiated in response to COVID-19 (pre-COVID-19 peak).

While technology on one hand eased the hospitalisation process of patients with COVID-19, initiatives like the launch of telemedicine units for home-quarantined cases (asymptomatic) provided a digital platform for a COVID-19 treatment [55] , thereby reducing the burden on the health infrastructure. Further, the success of policy and technological interventions applied together was evident in the form of a substantial reduction in the number of new COVID-19 infections reported from Asia's largest slum (Dharavi) in the state of Maharashtra, the financial capital of India [56] . Here, on the technological front, both swab and blood tests of suspected cases were conducted, while on the policy front an ‘Integrated Disease Surveillance Programme’ was activated, which involved healthcare workers going door to door to test suspected cases and their family members.

Evolution of testing criteria

Initially, the testing protocol was limited to symptomatic international passengers entering India, contact history with a positive case, and symptomatic healthcare workers. However, from April onwards people in infection hotspots with symptoms of cold, cough and fever; individuals who participated in large gatherings; and patients with severe acute respiratory illness could be tested. It was reported that nearly 80% of confirmed cases were asymptomatic or had mild symptoms [57] . A revised discharge policy (10 days) was recommended compared with the initial 14 days standard from symptom onset and no fever for three days, to reduce the pressure on medical infrastructure [58] .

Evolution of testing methods

During the early phases of the COVID-19 outbreak, public hospitals used the RT-PCR method, which gave results of high accuracy but with a turnaround time of 24 hours. The scale of testing increased as private laboratories began performing tests and using the antibody blood test, which gave results in less than 30 minutes, but with an accuracy as low as 50%. The Indian Council of Medical Research (ICMR) issued guidelines for unconfirmed cases with negative results from antigen tests to have RT-PCR done; in Delhi alone less than 1% of those with negative antigen results received an RT-PCR test [32] . As of 4 August 2020, 30% of all tests being conducted were antigen tests [59] . The COVID-19 positivity rate may not have given a clear picture of the scale of the outbreak due to large numbers of false negatives. This hindered contact tracing and may have acted as a catalyst for new cases. Furthermore, India's testing rate continues to be one of the lowest in the world [60] . Despite a manufacturing capacity of 4.87 million test kits per day, the country could only conduct 0.7 million tests per day as of 12 August 2020. This could be attributed to the fact that the state governments paid private laboratories in the range of almost half of the price cap set by ICMR [61] . More tests per million people did not necessarily result in more positive cases being detected (see Table 8 ) [62] . For example, in Rajasthan and Bihar, more positive cases per 100 tests were found in Bihar than Rajasthan, even though more tests per million people were conducted in Rajasthan.

Variation in the scale of testing across states around 12 August 2020.

Healthcare system response data

Demand-side versus supply-side scenario.

With increased testing capacity, infrastructure and human resources, India equipped itself to handle the expected surge in cases during the later phases of lockdown. In addition to public–private partnerships (PPPs) in the health sector, the government augmented health infrastructure through the creation of dedicated COVID-19 facilities. As shown in Fig. 10 [63] , admission to a dedicated COVID-19 facility was based on the clinically assessed medical condition of a patient, as the three types of facilities were equipped with different medical infrastructure. Table 9 [64] provides information regarding the medical infrastructure in these facilities. However, estimating the percentage increase in medical infrastructure pre- and post COVID-19 remains a challenge, due to the absence of data regarding new infrastructure that has been built and existing private facilities that were reserved as COVID-19 wards.

Infrastructure dedicated to COVID-19.

Medical infrastructure in dedicated COVID-19 facilities.

Medicines and medical services

All elective surgeries were curtailed during phases 1 and 2 of the lockdown, with only life-saving surgeries taking place from 21 March 2020 [65] . Patients dealing with other ailments were encouraged to use telemedicine services, as outpatient departments were closed [66] . However, lockdown 4 included the opening of outpatient services for all ailments.

Economic and financial fluctuations

Fiscal value of human lives lost to covid-19.

Subsequent lockdown phases since the start of the pandemic have had an adverse impact on the Indian economy. Table 10 [67] shows an approximation of the total fiscal value (TFV) of human lives lost in India due to COVID-19 as USD 815 million (4% rate) and USD 703 million (6% rate) at the prevailing interest rates in India (to 12 August 2020). As shown in Eq. (1 ), the discounted fiscal value (DFV) for a particular age group has been calculated as the product of non-health GDP per capita (NGDPC), discounted years of life lost (DISYLL), and the number of deaths in the age group due to COVID-19 [67] . NGDPC has been calculated as the difference between GDP per capita and current health expenditure (CHE). Years of life lost (YLL) for each age group have been estimated as the difference between the life expectancy at birth (LE) and the average age at death from COVID-19 [56] . The discount factor 1/(1+r) k in Eq. (1 ) has been used to calculate DISYLL, where r is an interest rate that measures the opportunity cost of lost earnings. The summation ( Eq. (1 )) used k = 1 as the first year of life lost and k = n as the final year of the total number of YLL per case of COVID-19 within an age group. The number of deaths due to COVID-19 in a particular age group (N) has been approximated as a percentage of the total number of deaths (TD) due to COVID-19 (see Fig. 7 ). The fiscal value of life lost across the age groups in Table 10 was summed up, and finally the average monetary value per human life lost was calculated as total fiscal value divided by TD. Also, the average monetary value per human life lost from COVID-19 in India was found to be sensitive to the discount rate [67] .

Fiscal valuation of life lost due to COVID-19 with 2020 as the base year.

Data used: TD around 12 August 2020 = 47,138 [3] , GDP per capita (2018) [5] , CHE (2017) [5] .

International trade and sectoral impact

The World Bank downgraded India's growth for the fiscal year 2021 [68] . However, the International Monetary Fund's GDP growth projection (2021–22) for the country (1.9%) was the highest among the G20 nations [69] , although the pandemic in India began when its GDP had already been on a downward trajectory since Q2 2018–19 and experienced a new low (4.5%) in Q2 2019–20 (see Fig. 11 ) [ 70 , 71 ]. The impact of any economic downturn will depend on the duration and severity of the pandemic. In an optimistic scenario, the recovery could be V-shaped, both in GDP growth and inflation, compared with a U-shaped recovery in an extended recovery scenario.

Real GDP growth percentage (constant 2011–12 prices).

Credit rating agencies have downgraded India's growth for the fiscal year 2021 [ 72 , 73 ]. Exports and imports form a crucial component of GDP. The effect of the COVID-19 pandemic reduced India's exports by 34.6% and 60.28% in March and April, respectively. The trade deficit narrowed to USD 9.76 billion in March 2020 [74] , which was further aggravated by a sharp depreciation of the rupee against the dollar (INR 75 per USD on 20 March) [70] . Many sectors were expected to experience overall negative growth [73] , especially import-driven sectors such as the automotive industry [75] . The Indian aviation industry (the world's third-largest domestic aviation market) [76] was near to collapse following the travel bans; however, it gradually started to revive with the opening up of domestic flights. Severe liquidity problems were experienced by the hospitality industry (airlines, hotels and restaurants). Amidst this economic uncertainty and a collapsing growth rate, the RBI slashed repo rates to provide stimulus to the economy, increase liquidity in the market and possibly reduce the cost of financing for the corporate sector. Despite these efforts, the growing number of COVID-19 cases casts a shadow on the recovery of the economy in the near future.

Understanding the impact of the COVID-19 pandemic on any country and analysing the impact of interventions that were intended to contain it requires several critical considerations at the present (in addition to a lot more data in the future to substantiate any findings, in the absence of any precedents). One needs to appreciate the size of a nation; consider its population, the socio-economic fabric of which can support or cripple any policy intervention; have a thorough grasp of how good or bad its healthcare system was in the first place; have the right definition of success criteria in line with the extent of the spread of the virus; and possess the ability to identify relevant and useful data.

COVID-19 vis a vis the Indian context

In a developing country such as India, with the world's second-highest population, fifth-largest economy, the fastest-growing major economy [77] , and one of the lowest healthcare expenditures per capita, it is easy to see how a disaster such as the COVID-19 pandemic would be catastrophic for the nation, both in terms of lives and livelihoods. Even the most earnest, massive, and unprecedented policy and technological interventions would be at best limited in their ability to solve the prevailing problems. Despite this, the country has fared much better than many other developing countries in managing the health impact of the crisis so far.

Health impact

Our study found that the high recovery rate from COVID-19 in India was a result of significant technological interventions, effective mitigation policies implemented in a phased manner by the government, complemented by the demographic dividend. However, any initial success of handling the pandemic will not last without continuous and reliable testing followed by contact tracing [78] . For instance, the state of Kerala, which was initially leading the country's war against the pandemic, later showed a significant drop in recovery rates due to a resurgence in confirmed cases [79] . With stark variations in the numbers of tests as well as COVID-19 trends across the states of India, they were uniquely equipped to handle the pandemic.

While increased testing has been proposed as the most potent solution to COVID-19 globally, it is important to understand country-specific nuances around how testing is being carried out and how it should be done, to arrive at the right solution for India. An increased capacity to manufacture testing kits in India is commendable but will only make a difference to the overall spread of the pandemic if it aligns with the number of tests conducted daily, dependent on the availability of healthcare services. Again, variations in COVID-19 tests conducted to accelerate national level testing should be based on the reliability of results, so as not to slow down contact tracing efforts.

Economic impact

On the economic side, high unemployment during the nationwide lockdown, instead of an initial lockdown policy based on disease spread within states [80] , complemented by paid-for testing and expensive treatment for COVID-19 in private facilities, have only exacerbated the existing state of economic inequity [81] . On the surface, while the resumption of economic activity amid the pandemic looks set to lead to economic recovery, the economic modelling used shows that the average monetary value per human life lost from COVID-19 in India translates to 7.09–8.22-fold of the country's GDP per capita.

Conclusions and policy implications

The spread of COVID-19 in India has tested the country's pandemic preparedness in terms of its health infrastructure, technological capabilities and policy interventions. The initial impact of a timely and one of the most stringent lockdown policies was observed to slow the spread of the virus. At the same time, it helped the country to prepare critical medical infrastructure, human resources and technological advances. The severity of the COVID-19 pandemic in India has been relatively low compared with many other developing countries in terms of case fatality and recovery rates. However, the crisis has augmented the pre-existing risks of economic slowdown, while the underfunded public healthcare system has played havoc with the pandemic management strategy in the country. Overall, the pandemic has been a wake-up call and India is now consciously thinking about embracing long-term measures to develop a responsive, sustainable and robust healthcare system, to which PPPs and the manufacturing sector might make significant contributions.

Limitations of the study and scope of future work

Due to limitations of data relating to existing and augmented infrastructure facilities in terms of hospitals, beds and ventilators, a comparison of pre- and post-COVID-19 infrastructure is missing. Case fatality rate analysis based on co-morbidities is missing due to insufficient availability of secondary data. Future work could include recommendations for possible revisions to the existing population-level policy, taking a cue from other countries. This could help ensure comparable infrastructure and resources to face future pandemics.

Ethical approval

Not required.

CRediT authorship contribution statement

Isha Goel: Conceptualization, Data curation, Formal analysis, Writing - original draft, Writing - review & editing. Seema Sharma: Supervision. Smita Kashiramka: Supervision, Writing - review & editing.

Declaration of Competing Interest

None declared.

Acknowledgment

We are thankful to Avinav Goel and Mohd. Ahmad Khalid.

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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.

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