COVID-19, a global pandemic has severely affected economic activity around the globe. Indian economy which was already facing an economic slowdown is now facing severe repercussions due to the impact of lockdown; imposed to control the spread of coronavirus. According to recently released estimates of State Bank of India, the nearly two-month lockdown could contract the Indian economy by 40 per cent in April-June quarter of 2020-21. Moody’s has predicted that India’s GDP could contract by 4 percent in Fiscal Year 2020.
Leading economists have predicted that India would face the worst recession in 40 years as coronavirus has halted the economic activity in most of the sectors. India’s manufacturing and services sector recorded a sharp decline in production activity in the month of April. The services industry accounts for India’s 52 percent of the GDP. Aviation, hospitality and retail sector have been affected the most. Supply side disruptions have resulted in shortages of imported raw materials necessary for the production process. India’s exports and remittances have also been severely hit.