Impact of Covid19 on various sectors and a Post-COVID world

COVID19 has come as a shock to lives and livelihoods, making people stay at homes for a prolonged period. In the wake of the response, governments of many countries have implemented lockdowns to slow down community transmission. With infected people rising every single day, everyone is thinking about what’s next. How long will the lockdowns be? Are lockdowns even worth it? When will our lives be the same again? And the most crucial question, how will the economy survive? There is no clear evidence of measures taken by authorities are working or not; it is just that full efforts are being made to protect the incredible wealth of the nation: human life. But on the economic front, it is believed that the economic and welfare costs of COVID19 will probably be much more severe than the Global Financial Crisis of 2008. The ongoing pandemic has caused severe disruptions to the global supply chains with a concomitant decline in household demand. Almost every major economy in the world, including India, is significantly affected by the current pandemic.Hence, in this blog, we try to analyze the possible long-run impact of COVID19 on various sectors.

Aviation and Tourism

According to the Travel Agents Federation of India (TAFI) reports, the tourism sector is taking a nosedive. It would take a year or maybe more for the industry to revive after the lockdown is lifted. The ongoing lockdown has made the upcoming summer season a forbidden fruit since as many as 2 lakh people are likely to lose their jobs. India’s aviation industry is expected to incur losses of $3–3.6 billion in the June quarter because of COVID19. A similar trend is observed globally wherein many countries have banned international traffic, both inbound and outbound, at least for six months. The aviation sector, which was booming until recently, is also experiencing plummeting revenues since most flights are grounded in all countries, except for cargo. It has left airlines will have a shortage of funds to pay their employees in the near future. Further, fresh recruitment in these sectors have been on hold or cancelled, which has left millions of budding tourism managers and aviators in a tight spot. But do they have a choice except to wait and watch?

Healthcare and pharmaceutical industry

China, the initial epicenter of the global outbreak, is also the world’s largest supplier of active pharmaceutical ingredients (APIs). India is the largest provider of generic drugs globally. Indian pharmaceutical sector industry supplies over 50% of global demand for various vaccines. Still, it gets most of its raw material from China.At this stage of the coronavirus pandemic, as we all know, most developed countries in the world are also suffering the most and faced criticism for displaying a lack of leadership. India’s position is relatively stable and likely to stay that way, so India has an opportunity to strengthen its pharmaceutical sector both in terms of value and volume.

It is expected to grow at a high rate and also as many countries are deciding to look for other countries as trading partners in place of China. India can benefit from this as it now can reduce its dependence on China for APIs and can be self-reliant in the manufacturing of APIs and maybe become the exporter of the same. However, the shift would require a substantial improvement in infrastructure capacities and ease of doing business. The government has recognized this opportunity and has approved an Rs.3000 crores project to set up bulk-drugs parks in mid-March and also increasing financial incentives to some bulk drugs whose output can boost.

Now due to many new opportunities, the Indian pharmaceutical sector can become much more valuable.

‘Digital India’

Given the shift towards online culture, there will definitely be a requirement of better connectivity and digital services. The ‘Digital India’ Scheme, implemented by the government in 2015, does not look like a far-fetched dream anymore. But the fulfilment of dreams does not stop here, with the ‘Make in India’ dream also likely to speed up, now that there would be trust issues on foreign goods and services, especially those imported from China, post-COVID19. This will give a boost to local manufacturers and startups in India.Also, the Jio-Facebook deal highlights the possibility of WhatsApp Pay and JioMart combining to bring Kirana shops online, by empowering them to accept orders via JioMart and seamlessly pay through the WhatsApp Pay service.But this is an ideal scenario. While considering this as a boon, it is equally important that we highlight the fact that, given the widespread financial and digital illiteracy and informal sector unemployment, it is still quite far from reality. Moreover, when we talk about ‘Digital India’, the first step is access to a smartphone: which is not possible for many due to poverty. Also, many villages do not have adequate electricity to power a ‘Digital India’.

Education

School Education: More than 1.5 billion school children around the world are using online education as a means to get educated, given that schools in more than 165 countries around the world have closed due to the Coronavirus outbreak, according to UNESCO. Despite this fact, there will be a shift back to online education. School children need to play around and will grasp better if physically present in the class, apart from their physical and overall development that happens in school. They require an atmosphere that cannot be created by online education.

College Education: Colleges are expected to adopt online education to a greater extent. Many colleges had already started/were looking to start some form of online impartment of schooling. Many premier institutes, the IITs, for example, have students coming from all over India, and hence for them, it makes sense to use online as an added channel for education. The notable problem here still is the fact that many students put up from villages where connectivity is not as good as that in metropolitan cities. However, with the digital transformation in India, connectivity is expected to reach even the remotest of villages soon. Yet, laboratory and practical work cannot be done online: a drawback of online education which remains to see the light of day. Nonetheless, it is a step in the right direction.

Conclusion

In summary, there is no doubt that most of the sectors will be affected badly on account of COVID19, but the high impact sectors in terms of risk primarily include travel, tourism, and hospitality; labour-intensive sectors like construction, transport, and manufacturing of non-essential items. From the discussion above and the news of the extension of lockdowns in several major countries, it can be concluded that we might experience a prolonged economic recession. Nevertheless, given all this, we also believe that the world will come out of this soon. Everything will get back to a ‘new’ normal in which there will be an inclination towards online services, better health and hygiene practices, and a strengthened health sector, among many others.

We’ll be back soon with another article. Till then, stay safe!

Views expressed are personal. All errors are our own.