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How Covid 19 Changes Economy In India?

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By Author: GoodWill
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Initially it seemed that COVID-19 (coronavirus strain) was a Chinese problem only, and the rest of the world was slow to react. Within a few weeks it became evident that the problem had spread way beyond the country of China and its effects were showing up around the globe.

India was still slow to react as only a small number of cases were recognised in the country. As time went on, it finally became accepted that COVID-19 is a worldwide issue; a pandemic.

Eventually the government of India declared the state of lockdown, the full duration of which is still not known. The health effects of COVID-19 are very obvious, the breathing difficulties, the coughing, the tiredness, the fever, and in the worst cases death. If the health effects are considered to be the direct effects of the virus, we can say that they are currently affecting relatively few people in India, at least when thought of as a percentage of the population. The secondary effects however are things which barely a single Indian citizen can escape from.

Almost everybody will be experiencing inconvenience to some degree, whether it be interruptions in the supply of food and groceries, inability to carry out daily activities or hobbies, closure of workplaces, inability to work or loss of business resulting in financial difficulty, the list is endless. Human life and human activity is facing so much restriction in the last few weeks and months that productivity is reduced dramatically. As you can imagine, this is having a huge impact on the economy, and consequently the stocks and shares markets. Let us think about COVID-19’s impact on the Indian economy so far.


Whenever there is uncertainty, the markets are bound to suffer. History has proven this to be so. One thing that is for certain is that uncertainty is rife at the moment. There are so many questions that do not have a definite answer at the moment. How long until COVID-19 goes away? Will there be a second wave? Can a person who was infected and recovered contract the virus again? Which companies are resilient enough to survive this trough in productivity, and which ones will be doomed to fail? How long will it take for the markets to recover? At the moment we can only watch, wait and speculate.


The State Bank Of India have predicted that, there is likely to be a 1.7 per cent impact on real GDP in fiscal year 2021 as a result of the lock-down, that has caused at least 70 per cent of the economy to grind to a halt. If that is true then it would seem that recovery of the markets may take some time indeed, with a serious recession dragging on well into 2021. Many measures are being put into place to help ease the situation. For example, The Reserve Bank of India has cut its policy rate down by 75 basis points.

A moratorium of three-months has been announced on all term-loans, which will no doubt ease the burden for small businesses and retail borrowers. For the needy people, the central and state governments are handing out pulses and rice which may go a small way to easing their woes. These are just a couple of the many measures that are being rolled out, all of which are costing money and stripping out the reserves. The country itself will take time to recover. Authoritative sources expect the Indian economy growth to slow to between 2 and 4% (previously predicted to be 5.2%) for fiscal year 2021. Consumers will have less money to spend, industry will struggle to produce and sell, foreign investors are pulling out of the markets in developing countries.


As terrible as COVID-19 is (and there is no denying the fact that it is a terrible occurrence for
mankind as a whole), it does create a very rare situation. Market crashes due to viruses have happened in the past, but under different, and therefore incomparable circumstances. The Spanish flu of 1918-1919 happened in the closing days of Word War I, and the H1N1 flu of 2009 occurred at a period when recession was already happening. This is in stark contrast to February 2020 when markets in India were rallying strong and the economy was enjoying itself. The sudden crash of the markets has sent foreign investors pulling out their money and running for the hills. Just as in wildlife, the death of a great animal is a win for scavengers such as hyenas and vultures, the market crash creates ‘interesting’ opportunities for new investors to come sniffing, and pick up some bargain shares at rock bottom prices.

During these testing times, many individuals and businesses find themselves seriously short of funds and are disposing of their investments, cancelling their investment plans and living hand-to-mouth. Those who are in a good position to be able to ride out these difficult times and still have excess cash in the bank can take advantage of the situation. As the famous investor Warren Buffet puts it, ‘When it rains gold, put out a bucket, not thimble’.

If you plan to invest now, there are at least a couple of things to bear in mind. Experts have predicted that it may take 3 to 5 years for the market to recover after this shock. This is only a prediction and is not guaranteed, however history has shown us that markets have always righted themselves after a crash. It is highly likely to recover, but the big question is still how soon? You must be prepared to wait it out, so plan for a long-term investment. Don’t expect to be pulling out in 2021 having earned a large profit, as in all likelihood, the world in 2021 will still be trying to work out how to recover from this financial crisis. It is also quite likely that a substantial number of companies may not survive this recession. It is therefore particularly important that you do proper research into companies you are interested into investing in. It is recommended to look for those with robust and resilient business models who can survive such troughs.

If you would like to discuss the current state of the markets, the possibilities of investing now or what to do with your current investments, you can call GOODWILL INDIA on +91 80122 78000. GOODWILL INDIA is the home of low, low brokerage in India, and the provider of extra value in the form of multiple bonus features for all their customers.

Deliverers of expert training for beginners and advanced traders. Over 200 branches and sub-brokers all over India. Online FREE account opening service with no need to visit a branch! Invaluable during the days of lockdown.

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