BY MUSKAAN CHOUDHARY
The current pandemic has proven to be life altering, more so negatively than positively for most of the world. COVID-19 started tightening its clutches on the world since the very beginning of 2020, leaving numerous countries under dire consequences. On the brighter side, humans slowly started adapting to the changes. Our society is dynamic, change is the name of the game and humans are made to cope. Governments of different countries started implementing radical policies and measures according to the gravity of the situation. Complete lockdowns were implemented, protective gear and social distancing was made mandatory, essentially, no blank spaces were left. As a result of the lockdown, the global economy took a huge hit.
Economically, many countries had already started to lose the fight long before the pandemic. The global fall of the economy is likely to further devastate them and even result in another recession similar to the one in 2008-09, if not worse.
The lockdown has had a distinguished impact on all the three main sectors of our economy – primary, secondary and tertiary. The primary sector is mainly concerned with the industries involved in production and extraction of raw materials like agriculture, forestry, fishing etc. As for India, agriculture is the backbone of our economy and sadly it got affected the most.
Initially during the full lockdown period, borders between states and countries were closed and transport vehicles were not allowed which resulted in the wastage of crops and also majorly disrupted the supply chain which ultimately caused the farmers to lose a lot money. Since many labourers were not able to travel, the farmers faced a lack of manual labour while many farmers were stuck in other states or cities and as a result the crops wilted away all the while also ruining the fertility of the land. Amid the virus, India was also plagued by a locust attack for several months. They had to invest twice as much money into procuring several precautionary measures (PPE kits) if they wanted to keep working on their farms.
The secondary sector consists of all branches of human activities that transform raw materials into finished good or products to be sold into the market. Since the secondary sector is intensely dependent upon the primary sector for raw materials, the downfall of the latter has caused great distress, especially in industries like aviation, automobile, electronics etc. The current pandemic has not only brought all the manufacturing sectors to a standstill, but also caused a worldwide factory flatline.
There is a lot of uncertainty in businesses regarding their capital, labour and demand of products. The cash flow is tight even after the lockdown has been lifted from many countries, demand and supply chains have been disrupted, stocks of raw materials and finished good have deteriorated in terms of quality. The staff turnover, as per the UNIDO, is expected to be less which will affect the productivity of the goods. China holds responsibility for exporting most of the components used in electronics and hence the factory shutdowns have massively impacted the production. Pharmaceutical companies, however, have managed to stay afloat. They have an extensive demand for alcohol-based sanitizers, PPE kits, N-95 masks etc.
The tertiary sector, more commonly known as the service sector provides intangible commodities in the form of service. This includes retail, hotels, eateries, transport etc. Prior to the pandemic, there was a huge market for these services and hence the service sector was growing exponentially. Since the pandemic, there has been found a huge fall in demand for these services primarily due to the fear of catching the virus. Consumers are being extra cautious about what, how and where they buy their commodities from, making sure to avoid crowded places and physical contact with people. Industries like tourism, entertainment, education etc have been intensely dented.
Though the virus caused a huge downfall for the conventional brick and mortar stores, the e-commerce industry was found thriving under these conditions. People have started relying more on online shopping for groceries, clothes and other miscellaneous items. This has also led to numerous start-ups and online businesses.
We are yet to see the full economic backlash of this pandemic and judging by the numbers, it will most likely not be pretty. India’s GDP itself, is expected to experience a fall of 4.5% in 2020 fiscal. To successfully diminish the economic aftermath of the pandemic, the governments of all the countries need to carefully assess the situation and make necessary changes to avoid the fall of their respective as well as the global economy. The successful containment of the virus is the only way to reinstate the disrupted demand and supply chain, ultimately restoring the economy.