page_title: Economic impact of the COVID-19 pandemic in India
section_title: Economic situation
hierarchical_section_title: Economic impact of the COVID-19 pandemic in India / Economic situation
caption_attribution_description: English: A Newspaper vendor in Tamil Nadu, India, wearing safety gloves, mask and safety glass.
context_page_description: The economic impact of the 2020 coronavirus pandemic in India has been largely disruptive. India's growth in the fourth quarter of the fiscal year 2020 went down to 3.1% according to the Ministry of Statistics. The Chief Economic Adviser to the Government of India said that this drop is mainly due to the coronavirus pandemic effect on the Indian economy. Notably India had also been witnessing a pre-pandemic slowdown, and according to the World Bank, the current pandemic has "magnified pre-existing risks to India's economic outlook".
  The World Bank and rating agencies had initially revised India's growth for FY2021 with the lowest figures India has seen in three decades since India's economic liberalization in the 1990s. However after the announcement of the economic package in mid-May, India's GDP estimates were downgraded even more to negative figures, signalling a deep recession. On 26 May, CRISIL announced that this will perhaps be India's worst recession since independence. State Bank of India research estimates a contraction of over 40% in the GDP in Q1 FY21. The contraction will not be uniform, rather it will differ according to various parameters such as state and sector.
context_section_description: In India up to 53% of businesses have specified a certain amount of impact of shutdowns caused due to COVID-19 on operations, as per a FICCI survey in March. By 24 April the unemployment rate had increased nearly 19% within a month, reaching 26% unemployment across India, according to the 'Centre for Monitoring Indian Economy'. Around 140,000,000 (14 crores) Indians lost employment during the lockdown. More than 45% households across the nation reported an income drop as compared to the previous year. Various business such as hotels and airlines cut salaries and laid off employees. Revenue of transport companies such as Ola Cabs went down nearly 95% in March-April resulting in 1400 layoffs. It was estimated that the loss to the tourism industry will be ₹15,000 crore (US$2.1 billion) for March and April alone. CII, ASSOCHAM and FAITH estimate that a huge chunk of the workforce involved with tourism in the country faces unemployment. Live events industry saw an estimated loss of ₹3,000 crore (US$420 million). 
  A number of young startups have been impacted as funding has fallen. A DataLabs report shows a 45% decrease in the total growth-stage funding (Series A round) as compared to Q4 2019. According to a KPMG report venture capital in Indian startups has fallen over 50% in Q1 2020 from Q4 2019. 
  Government revenue has been severely affected with tax collection going down, and as a result the government has been trying to find ways of reducing its own costs. On 10 May 2020, Union Minister Nitin Gadkari said that some states didn't have enough money to pay salaries in the near future. In April, former Reserve Bank of India chief Raghuram Rajan said that the coronavirus pandemic in India may just be the "greatest emergency since Independence", while the former Chief Economic Advisor to the Government of India said in April that India should prepare for a negative growth rate in FY21.
  The Indian economy was expected to lose over ₹32,000 crore (US$4.5 billion) every day during the first 21 days of the lockdown, according to Acuité Ratings. Barclays said the cost of the first 21 days of shutdown as well as the previous two shorter ones will total to around ₹8.5 lakh crore (US$120 billion). Confederation of Indian Industry (CII) had sought an economic fiscal stimulus package of 1% of India's GDP amounting to ₹2 lakh crore (US$28 billion). The fiscal package and fiscal policies approach is being compared to what has happened in other countries such as Germany, Brazil and Japan. Jefferies Group said that the government can spend ₹1.3 lakh crore (US$18 billion) to fight the impact of coronavirus. Bloomberg's economists say at least ₹2.15 lakh crore (US$30 billion) needs to be spent. Former CEA Arvind Subramanian said that India would need a ₹10 trillion (US$140 billion) stimulus to overcome the contraction.
caption: A newspaper vendor in Tamil Nadu, India, wearing goggles, safety mask and hand gloves.
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