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GDP, or the Gross Domestic Product, is simply the measure of value created by manufacturing goods or services in a country at a given period of time. It also measures the profit out of this product and the money spent on final goods. Many national and international organisations, such as Organisation for Economic Co-operation and Development (OECD) and the IMF, maintain slightly different definitions. According to the definition given by OECD, GDP is the aggregate measure of production, i.e., equal to the sum of all the gross values, including any taxes and subtracting subsidies. As we have seen, COVID-19 has marked its impression on almost every sector. It has also marked a significant downfall in India’s GDP growth rate.
India’s GDP Growth Rate for the Past Few Years
After COVID-19 affected India, there was a huge downfall in the economy of India. India and almost all other countries affected by the pandemic also have a GDP downfall. However, the Indian GDP growth rate has been adversely affected.
As per the reports, the GDP dropped by 24.4% from April to June 2020. From July 2020 to September 2020, the economy again shrank by 7.4%. However, there was a slight recovery in GDP, rising from 0.5% to 1.6% from October 2020 to March 2021. This downfall in GDP is the highest downfall ever recorded in the Indian economy. If we talk about the historical GDP breakdown, it occurred only four times in 1958, 1966, 1973 and 1980, a maximum of about 5.2%.
Thus, the extreme downfall in GDP had significantly impacted the Indian economy.
Economic Sectors Affected by COVID-19
COVID-19 has affected almost all the economic sectors of India. Its impression on different sectors is as follows:
Agriculture
Agriculture is the backbone of the Indian economy, and most of our rural population is involved in it. The COVID-19 wave had caused the closure of Mandis or had imposed strict timings for opening and closing. Moreover, the local vendors could not sell vegetables all day without restrictions. The closure of Mandis in the peak season of harvesting leads to the rotting of crops in the field. Thus, the agriculture wage growth was adversely affected and shrunk by 2.9% from the original 8.9% in April to August 2020.
Aviation and Tourism
As we all have witnessed, flights and travelling were completely banned during the peaks of a pandemic. The aviation sector is responsible for 2.4% of India’s GDP. On the other hand, the tourism sector provides 9.2% of India’s GDP. The complete ban on these sectors leads to the loss of billions to these industries. Thus, it is clear that the ban on aviation and tourism greatly impacted the Indian economy and reduced GDP growth. However, after the betterment of the conditions, aviation and tourism began again but with strict guidelines and proper sanitation.
Pharmaceuticals
Pharmaceuticals contribute to 2% of the total Indian GDP; after the pandemic, there has been a remarkable rise in this field. With the beginning of 2020, the market of pharmaceuticals has gained a great surge. The people became very careful about their health and sanitation after COVID-19 laid its foot in India. Thus, there was a great demand for medicines or drugs and PPE kits in the market. This high demand caused great pressure on the pharmaceutical industry.
Manufacturing
The manufacturing sector in India contributes approximately 17% of the total GDP of the Indian economy. The manufacturing of products of certain famous companies such as Bharat Forge, Ultratech Cement, Aditya Birla Groups, Tata Motors and others were either significantly reduced or completely closed till further government notice. There was no production of any two-wheelers or four-wheelers during the pandemic time.
Stock Market
The rise in the stock market also flourishes the Indian economy. However, according to the SENSEX reports, the stock market fell 4000 points, i.e., 13.15%, by 23 March 2020.
Exports and Imports
The export of India contributes 18.43% of the total GDP of the Indian economy, whereas Indian import contributes 20.96% of the GDP of the Indian economy. Due to COVID-19, by April 2020, the Indian export fell by 36.65%, whereas the import fell by 47.36%. There was a complete restriction on imports and exports of goods during the pandemic.
Conclusion
COVID-19 has dramatically impacted the Indian economy, causing a significant downfall in India’s GDP growth rate. The GDP of any country defines its economic status for a particular period. This downfall in GDP is found to be the highest downfall ever recorded. As per the reports, the GDP dropped by 24.4% from April to June 2020. From July 2020 to September 2020, the economy again shrank by 7.4%. COVID-19 has affected almost all the economic sectors of India, such as Agriculture, import and export, aviation and tourism, manufacturing, etc. Due to the pandemic, all these sectors were either completely closed or had reduced their production, greatly affecting the Indian economy.
