Principles of Economics

Assignment

Name of the Subject: Principles of Economics

Course Code: HUL 411

Topic of the Assignment:

1. How Covid 19 has impacted the Economic of India and the world?

2. What should be done by the public as well as private sector to improve

the economy?

Submitted by:
Mr. Abhishek Kumar Singh
Enrollment Number: BT16CIV002
Department: Civil Engineering
ID Number: 19842
Date Of submission: May 25, 2020

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 Submitted to:
Dr. Bibhuti Ranjan Mishra
Department of Humanities & Social Sciences,
VNIT Nagpur

Department of Humanities & Social Sciences, Visvesvaraya National

Institute of Technology, Nagpur
South Ambazari Road, Nagpur-440010

Content
s:
What is
1.

2. Overview of COVID 19?

3. What
4.
Countries could 19 has impacted the Economy
How COVID
be done by
affected
of India andthe
the World?
public as well
as private
sector to
improve the
economy? 2
3
 1. WHAT IS COVID 19?
No wonder this year has been filled with lot of ups and downs as far as
Country India is concerned! It all started from CAA then the riots
following it and now this The Pandemic- COVID 19! Not only to India
as country but this pandemic is making millions of people all across the
globe CRY. With every single day passing this Pandemic is adding more
and more cases to it, of course not in all the places but yeah definitely in
many! The death pole has been raised to 0.3 Million people from all
across the globe till date and still not taking rest. The words that people
might not have even known have become the words of regular use and
after sometime might even become part of their life. Who would have
even Google out the word Quarantine but now even an Eighty year old
lady who would not even have been to school knows the meaning well.
This Pandemic stopped Transportation, Trades, Communication,
Purchases, outings and everything that our life is revolving around is
Masks, Sanitizers and The Social Distancing…That’s what it’s all about
currently!

Almost everybody has something of the other to feel bad about because
everyone has lost something or the other directly or indirectly. But the
worst situation is of those who earn their livelihood from everyday
earning.

The World has not only slowed down but is almost stopped! Ohh
Humans! , the most intellectual animal on this earth has knelt down in
front of this 125 nm big Virus. Ohh Sorry! It’s not just a simple Virus
now but something that has imbalanced our lives!

The COVID-19 pandemic, also known as the corona virus pandemic, is an

ongoing pandemic of Coronavirus (COVID-19), caused by severe acute
respiratory syndrome Coronavirus 2. The outbreak was first identified
in Wuhan, China, in December 2019.

The World Health Organization declared the outbreak a Public Health

Emergency of International Concern on 30 January, and a pandemic on
11 March. As of 18 May 2020, more than 4.75 million cases of COVID-
19 have been reported in more than 188 countries and territories, resulting

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in more than 316,000 deaths. More than 1.75 million people have
recovered from the virus till date.

Currently there is no known vaccine or specific antiviral treatment.

Primary treatment is symptomatic and supportive therapy.

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 Overview
2.

of
Countries
affected:

One Asian country and seven European countries are among the ten most
affected lists of countries with Coronavirus, while more European
countries are witnessing a surge in cases. The US replaced China as the
country with the highest Coronavirus cases on, while more than 92% of
the global Coronavirus cases are currently outside China.

United States of America: The Super Power in the World is also

helpless in front of this Pandemic with total number of cases being the
maximum and that’s 15 Million with total deaths till date being 91k and
recovered cases being 0.3 Million.

Italy: The outbreak was confirmed to have spread to Italy on 31 January,

when two Chinese tourists tested positive for SARS-CoV-2 in Rome.
Cases began to rise sharply, which prompted the Italian government to
suspend all flights to and from China and declare a state of emergency.
An unassociated cluster of COVID-19 cases was later detected, starting
with 16 confirmed cases in Lombardy on 21 February. On 22 February,
the Council of Ministers announced a new decree-law to contain the
outbreak, including quarantining more than 50,000 people from eleven
different municipalities in northern Italy. Prime Minister Giuseppe
Conte said, "In the outbreak areas, entry and exit will not be provided.
Suspension of work activities and sports events has already been ordered
in those areas."

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On 4 March, the Italian government ordered the full closure of all schools
and universities nationwide as Italy reached a hundred deaths. All major
sporting events were to be held behind closed doors until April, but on
9 March all sport was suspended completely for at least one month. On
11 March, Prime Minister Conte ordered stoppage of nearly all
commercial activity except supermarkets and pharmacies.

Spain: Spain overtook South Korea in the number of Coronavirus cases

in the third week of March and China at the end of March. Since the
confirmation of first Coronavirus case in Spain on 01 February, the
Spanish COVID-19 nCoV-infected cases got closer to 1,000 in early
hours of 09 March and rose sharply to more than 112,000 on 02 April. A
minister in Spain contracted Coronavirus, while Princess Maria Teresa
died from Coronavirus marking the first royal death due to COVID-19.

China: The first confirmed case of Covid-19 has been traced back to 1
December 2019 in Wuhan. A public notice was released by Wuhan
Municipal Health commission on 31 December, confirming 27 cases and
suggesting wearing face masks. The WHO was informed on the same
day. In January and February, during the height of the epidemic in
Wuhan, about 5 million people lost their jobs.

India: India reported its first Covid-19 case on January 30, 2020, in
Thrissur, Kerala. On 22 March 2020, India observed a 14 voluntary
public curfew at the instance of the Prime Minister Narendra Modi. The
government followed it up with a nationwide lockdown for 21 days and
these lockdown has been extended for the 4 time till now.

South Korea: COVID-19 was confirmed to have spread to South Korea

on 20 January 2020 from China. The nation's health agency reported a
significant increase in confirmed cases on 20 February South Korea
declared the highest level of alert on 23 February 2020. On 28 February,
more than 2,000 confirmed cases were reported rising to 3,150 on 29
February. All South Korean military bases were quarantined after tests
showed three soldiers had the virus.

Europe: As of 13 March 2020, when the number of new cases became

greater than those in China, the World Health Organization (WHO) began

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to consider Europe the active centre of the pandemic. Cases by country
across Europe had doubled over periods of typically 3 to 4 days, with
some countries (mostly those at earlier stages of detection) showing
doubling every 2 days. As of 17 March, all countries within Europe had a
confirmed case of COVID-19, with Montenegro being the last European
country to report at least one case. At least one death has been reported
in all European countries, apart from the Vatican City. As of 18
March, more than 250 million people were in lockdown in Europe. As of
24 May, 68 days since the first case recorded, Montenegro become the
first corona-free country in the Europe.

Now let’s take a glance at country wise cases of this Public Health
Emergency till date:

Source of Information:

https://timesofindia.indiatimes.com/coronavirus/cases-in-india-and-world

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 3.How
COVID 19
has
impacted
Covid-19 will change the way the world works; just like the Great
Depression, dot-com bubble, and the 2008 financial crash did in the
theThe question on everyone’s mind is, ‘Will things go back to
past.
normal?’
economy of
The World Health Organization (WHO) first declared COVID-19 a world
India
health andin January 2020. Since the virus was first diagnosed in
emergency
Wuhan, China, it has been detected in over 190 countries and all U.S.
theInWorld?
states. early March, the focal point of infections shifted from China to
Europe, especially Italy, but by April 2020, the focus shifted to the
United States, where the number of infections was accelerating. The
infection has sickened more than 3.2 million people, about one-third in
the United States, with thousands of fatalities. More than 80 countries
have closed their borders to arrivals from countries with infections,
ordered businesses to close, instructed their populations to self-
quarantine, and closed schools to an estimated 1.5 billion children.

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The outbreak of pandemic Covid-19 all over the world has disturbed the
political, social, economic, religious and financial structures of the whole
world. World’s topmost economies such as the US, China, UK, Germany,
France, Italy, Japan and many others are at the verge of collapse. Besides,
Stock Markets around the world have been pounded and oil prices have
fallen off a cliff.

Also, many experts on economic and financial matters have warned about
the worsening condition of global economic and financial structure.
International Monitory Fund (IMF), explained that “a recession at least as
bad as during the Global Financial Crisis or worse”. Moreover, Covid-19
is harming the global economy because the world has been experiencing
the most difficult economic situation since World War-II. When it comes
to the human cost of the Coronavirus pandemic it is immeasurable
therefore all countries need to work together with cooperation and
coordination to protect the human beings as well as limit the economic
damages. For instance, the lockdown has restricted various businesses
such as travelling to contain the virus consequently this business is
coming to an abrupt halt globally.

Keeping in a view the staggering situation G-20 nations called an

emergency meeting to discuss worsening conditions and prepare a
strategy to combat Covid-19 as losses could be reduced. The spread of
the epidemic is picking up speed and causing more economic damages.

It is stated by the U.S. official from Federal Reserve’s that American

unemployment would be 30% and its economy would shrink by half. As
for as the jobs of common people are concerned, there is also a real threat
of losing their jobs because with business shutting down that shows that
companies will be unable to pay to workers resultantly they have to lay
off them. While when it comes to the stock market, it is severely
damaged by Covid-19 such as the stock market of the United States is
down about thirty percent.

By looking over the existing condition of several businesses, most of the

investors are removing its money from multiple businesses. So, the
impact of Covid-19 is severe on the economic structure of the world
because people are not spending money resultantly businesses are not
getting revenue therefore most of the businesses are shutting up shops.

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It also observed that the economic recovery from this fatal disease is only
possible by 2021 because it has left severe impacts on the global
economy and the countries face multiple difficulties to bring it back in a
stable condition.

Most of the nations are going through recession and collapse of their
economic structure that points out the staggering conditions for them in
this regard almost 80 countries have already requested International
Monetary Fund (IMF) for financial help. Such as Prime Minister of
Pakistan Imran Khan also requested IMF to help Islamabad to fight
against Novel Coronavirus.

Most of the economists have already predicted about the recession to

happen because there is no surety and still no one knows that how for this
pandemic fall and how long the impact would be is still difficult to
predict.

As Covid-19 has already become a reason for closing the multiple

businesses and closure of supermarkets which seems empty nowadays.
Therefore, many economists have fear and predicted that the pandemic
could lead to inflation. There are various sectors and economies that seem
most vulnerable because of this pandemic, such as, both the demand and
supply have been affected by the virus, as a result of depressed activity
Foreign Direct Investment flows could fall between 5 to 15 percent.

The pandemic is having a noticeable impact on global economic growth.

Estimates so far indicate the virus could trim global economic growth by
as much as 2.0% per month if current conditions persist. Global trade
could also fall by 13% to 32%, depending on the depth and extent of the
global economic downturn. The full impact will not be known until the
effects of the pandemic peak.

Covid 19 cases in India have been rising rapidly. The Indian government
has taken several steps to flatten the curve, such as imposing a nationwide
lockdown in four stages and a complete ban on travel. The result of these
measures is that they have brought down the economy on the knees,
impacting both overall consumptions and economy. This lockdown is
affecting many sectors, some sectors will be adversely affected and others
will see an uptick.

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Sector Wise Impact

Tourism and Aviation sector- the travel and tourism industry was one
of the first sectors to be affected by this outbreak, and most likely will
also be hardest hit. The Indian Association of Tour Operators (IATO)
estimates the hotel, travel and aviation sectors to incur losses up to Rs
8500 crore due to travel restrictions imposed on foreign tourist. Moreover
some report predicted that the Indian tourism sector would lose more than
over 3.8 crore jobs.

Cancellation of tickets, refunds and low utilization rate of airlines have

made matters worse for already distressed aviation industry in the midst
of a cash crunch.

MMSE Sector- The Micro, Small and Medium Enterprises (MSMEs) are
literally the backbone of all Indian sectors and often engaged in
manufacturing and export activities. Today, almost all MSMEs are out of
action due to corona virus lockdown, choking all production activities at
major firms across sectors. There are some reports that show how
MSMEs are reeling under crisis and have no money to pay their
employees.

Automobile Sector-The Automobile Sector is feeling the pinch too. The

automobile sector in India h s been forced to stop key manufacturing
activity and has led to sharp drop in production and sales. In passenger
cars alone, the lockdown is estimated to have reduced production by
nearly 240,000 units. Each day of loss of production is causing the
industry a loss over Rs. 2300 crore in revenue on average.

This sector will continue to face challenges on account of lack of

demand, global recession and falling income levels.

Entertainment sector- The popular movie industry is not behind. All

major releases and shooting of films have been put on hold. The Indian
cinema industry will likely to face a loss of nearly 200-300 crore in 2-3
months. The industry has a huge section of blue-collared workers on daily
wages, whose livelihood is at risk due to this nationwide lockdown.

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Real Estate Sector- The real estate sector outlook has also suffered
immensely due to the lockdown, which was announced to prevent the
spread of the deadly Covid-19 virus. Some report shows that housing
sales will fall 25-35 percent while office absorption will fall in the range
of 13-30 percent on year-on-year basis.

Besides, while construction activities have resumed in some areas, there

are many hotspots areas in urban areas where key construction project
have been put on hold for several weeks due to the lockdown. This has
led to unemployment among millions of migrant labourers in India, who
are engaged primarily in construction activities. Hardly anyone of these
labourers, who live on daily wages, has additional savings to see off the
lockdown period.

Chemical sector: - The Indian Chemical council l(ICC) said that many
essential life-saving drugs cannot be manufactured without an
uninterrupted supply of key chemicals. Citing an example, the council
said that many companies, which supply key raw material for drug like
paracetamol, are being forced to shut. "The key raw materials for
manufacturing of paracetamol, an essential drug, include a large number
of chemicals like benzene, sulphur, caustic, chlorine, hydrogen, nitric
acid, sulphuric acid and acetic anhydride.

With social distancing becoming norm, at least for the next few months,
travel and tourism and entertainment sectors, etc. are not expected to
recover soon. Furthermore, unemployment and fall in income level would
aggravate the situation.

In late January 2020, China was the first country to impose travel
restrictions, followed by South Korea and Vietnam. Over the five-week
period from mid-March to late-April 2020, more than 30 million
Americans filed for unemployment insurance, raising the prospect of a
deep economic recession and a significant increase in the unemployment
rate. Preliminary data for the first quarter of 2020 indicate that U.S. GDP
fell by 4.8% at an annual rate, the largest quarterly decline in GDP since
the fourth quarter of 2008 during the global financial crisis when the U.S.
economy contracted by 8.4%.4 Foreign investors have pulled an
estimated $26 billion out of developing Asian economies and more than

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$16 billion out of India, increasing concerns of a major economic
recession in Asia. Some estimates also indicate that 29 million people in
Latin America could fall into poverty, reversing a decade of efforts to
narrow income inequality. In Europe, over 30 million people in Germany,
France, the UK, Spain, and Italy have applied for state support of their
wages, while first quarter 2020 data indicate that the Eurozone economy
contracted by 3.8% at an annual rate, the largest quarterly decline since
the series started in 1995.

Among most developed and major developing economies, economic

growth at the beginning of 2020 was tepid, but still was estimated to be
positive. Countries highly dependent on trade— Canada, Germany, Italy,
Japan, Mexico, and South Korea—and commodity exporters are now
projected to be the most negatively affected by the slowdown in
economic activity associated with the virus. In addition, travel bans and
quarantines are taking a heavy economic toll on a broad range of
countries. The OECD notes that production declines in China have
spillover effects around the world given China’s role in producing
computers, electronics, pharmaceuticals and transport equipment, and as
a primary source of demand for many commodities. Across Asia, some
forecasters argue that recent data indicate that Japan, South Korea,
Thailand, the Philippines, Indonesia, Malaysia, and Vietnam could
experience an economic recession in 2020.In early January 2020, before
the COVID-19 outbreak, economic growth in developing economies as a
What
whole
4. was projected by the International Monetary Fund (IMF) to be
slightly more positive than in 2019. This outlook was based on progress
could be
being made in U.S.-China trade talks that were expected to roll back
some tariffs and an increase in India’s rate of growth. Growth rates in
done by the
Latin America and the Middle East were also projected to be positive in

public as
2020.These projections likely will be revised downward due to the
slowdown in global trade associated with COVID-19, lower energy and
well as
commodity prices, an increase in the foreign exchange value of the dollar,
and other secondary effects that could curtail growth. Commodity
private
exporting countries, in particular, likely will experience a greater
slowdown in growth than forecasted in earlier projections as a result of a
sector to
slowdown on trade with China and lower commodity prices.

improve
the 14

economy?
‘Helping hands are always better than praying lips’

With close to 50 lakh people infected and more than 3 lakh death around
the world, as well as global economic slowdown, Covid 19 is creating a
challenging test for humanity. Tackling this unprecedented challenge
requires a system approach and the mobilization of all stakeholders to
respond.

There is pressing need for economic measures to stabilise and stimulate

the economy and protect people’s job and livelihood. According to the
international labour organization, covid19 render 25 million people
unemployed and many more underemployed by virtue of reduced wages
and working hours. This is especially critical in India where a large part
of population is either self employed or dependent on daily wages.

Some of the measure which should be taken by the private and the public
sectors are as follows

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 Government should work on Direct Benefit Transfer (DBT), the
government should consider depositing cash on monthly basis
which would ensure the poor can take care of their basic needs
and help stimulate demand in the Indian economy. Many
countries including Canada and United States have announced
economic measures for individuals and businesses, and India
could take inspiration from them. Jan Dhan accounts could be a
good opportunity to transfer cash. With over 150 million
beneficiaries with accounts in urban banks, such transfer can
reach a large segment of this population.
 Government should also looks after the farmers of the country.
This is the of harvest season for Rabi crop so the government
should buy the crop at the minimum purchase so as to benefit the
farmer.
 With most of the plants shut, big automobile manufacturing
companies have announced pay cut and are waiting for a decision
on resumption of leaderships. So that the companies could cover
the loss due to lockdown and the business could smoothly run.
 Government should seek relief in form of tax cuts, deferment od
GST payment, the addition of jet fuel under GST, reduction in
airport charges, a temporary cut in excise duty on jet fuel, and
other financial.
 The governments across the country should adopt different ways
to increase the revenue like they should increase the taxes, cut
down the pensions and salaries in order to improve the economy.
 Some dry states in India should abolish the ban on liquor to
compensate the economical losses. There is the big loss in
revenue due to ban on liquor because it is not like there is
absolutely no alcohol available in these state. We all know tht
liquor is still available illegally. Due to this smuggling the profit
of selling alcohol goes to the smugglers instead of going to the
government. Government should increase the taxes on alcohol.
 Taxes on petrol and diesel can be raised because he oil prices
have fallen so drastically, they even dropped into the negatives for
a time. It is very good opportunity for the government to make
money.

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  Some people suggest that “Ultra Rich” tax should be imposed. An
extra tax should be imposed on the extremely rich people in our
country for short time, so that the government could earn money.

 Large firms or private sector can give fund to the small supplier.
They usually can raise money in bond market and pass it on.
 Some new taxes like alcohol tax should be imposed, which are for
the benefit of the people like fast food tax. Taxes on unhealthy
foods will lead to less consumption which is eventually better for
the people and the people that do buy pay more money and this is
more beneficial for the government. Some countries like Hungry
and Mexico has already imposed tax on fast food.

 Ease of doing business should be improved so that it can attract

companies to come in India and so business that will better off our
economy.
 The government should stop the frivolous expenditure on useless
spending. No money on some useless statue should be spent, even
now the central government is wasting 20,000 crore on the central
Vista project which seek to redevelop Central Delhi- the path
from India Gate to parliament. It is extremely unnecessary thing
and there is no need for this. This money should instead be used
where there is dearth of money.

 Loan taken by the people can be freeze so that it will not put extra
burden on them and when situation will become normal they can
start their work without extra stress.
 Government must plan for recovery and must minimize the
potential scaring effects of the crisis through policy action and
there should be proper utilization of PM care fund.

Conclusion: - Concerning the serious and worsening conditions all over

the world, nations need cooperation and coordination among themselves
including the help and mature as well as sensible behavior of people to
effectively fight against Coronavirus.

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Otherwise, because of the globalized and connected world, wrong actions
and policies taken by any state will leave a severe impact on other
countries as well. This is not the time of political point-scoring and fight
with each other rather it is high time for states to cooperate, coordinate,
and help each other to defeat this fatal pandemic first for saving the
global economic and financial structure.

This too shall pass. The curve will flatten. Humanity will survive. But
already the Coronavirus outbreak is taking on the shape of a ‘once-in-a-
generation disaster’. Cities, states, and nations are being scrambled to
outpace the disease. Around half of the world’s population is lockdown in
an attempt to stop the spread of COVID-19.

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