Page 43 - Banking Finance August 2020

ARTICLE

India's total electronic imports is equal to 45% that of China. As far as the tourism and hospitality sector is concerned,
Around one-third of machinery and almost two-fifths of we find that the tourism constitutes 10% (US$ 275 billion)
organic chemicals that India purchases come from China. to India's GDP. This is no small amount and the havoc caused
For automotive parts and fertilizers China's share in India's to it by Covid 19, has been alarming. Governments across
import is more than 25%. Around 65 to 70% of active the world have sealed international borders. There is a
pharmaceutical ingredients and around 90% of certain suspension of all international and domestic flights. Together
mobile phones come from China to India. this has brought an unprecedented phase in the history of
hospitality industry.
Covid-19 has disrupted global supply chains and this is
generating spill over effects throughout different levels of They have experienced exponential growth in cancellations
supplier networks. Global trade in 2020 has been falling in of about 90% bookings in March 2020 while new reservations
every region of the world thus affecting not only strong are almost zero thus causing a huge loss of Rs. 620 crores.
exporters (no output for their local companies), but also According to The Indian Association of tour operators, the
those that are importers (lack of raw materials). The World hotel, aviation and travel sector together may incur a loss
Trade Organization (WTO) expects global trade to fall up to of around 8,500 crores due to the restrictions imposed by
32% this year due to the coronavirus pandemic. the Indian government on the movement of flights.

In this backdrop, how fragile is India's unorganized sector, Agriculture accounts for 16.5% to GDP and 43% to
has been sufficiently proven when on 27 May 2020, lakhs of employment. COVID-19 is disrupting some activities in
daily wagers, migrant workers and people of small means, agriculture and supply chains. Preliminary reports show that
on being deprived of food and shelter, were constrained to the non-availability of migrant labor is interrupting some
move back to their native places. Undoubtedly, this has been harvesting activities, particularly in northwest India where
the biggest recession after Second World war. wheat and pulses are being harvested. There are disruptions
in supply chains because of transportation problems and
The outbreak of the virus has unprecedented implications other issues. Prices have declined for wheat, vegetables, and
on different sectors of Indian economy. Severe economic other crops, yet consumers are often paying more.
burden and grave consequences have to be borne by the
Indian industries in this backdrop of declining economic The closure of hotels, restaurants, sweet shops and tea
situation due to coronavirus. Hence, it is highly pertinent shops during the lockdown is already depressing milk sales.
here to gauge the impact of this pandemic on different Meanwhile, poultry farmers have been badly hit due to
sectors of Indian economy. The COVID-19 pandemic pushed misinformation, particularly on social media, that chicken
our economy into a Great Lockdown, which helped contain are the carriers of COVID-19. As per the survey conducted
the virus and save lives, but triggered the worst recession by Azim Premji University, approximately 37% of the farmers
since the Great Depression of 1930. It faces an uphill task
in its battle to recover from the COVID-19 setback.

The construction had a share of 8% in GVA in 2018-19. But
its employment share, according to the 2018-19 Periodic
Labour Force Survey (PLFS), was 12%. Financial services, real
estate and professional services, on the other hand, had a
GVA share of 22% in 2018-19. The employment share of this
sector was only 3.4%. This means that construction is a more
labour-intensive sector than finance. So, for an equal value
of loss in output, job losses in construction would be far
higher than in the financial sector. Bailing out the
construction sector can save a lot of jobs, mostly of the poor.

BANKING FINANCE | AUGUST | 2020 | 43