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IMPACT OF COVID-19 ON THE INDIAN ECONOMY

Anya Kumra . Manuscript Info Abstract . . Manuscript History Received: 05 June 2020 Final Accepted: 10 July 2020 Published: August 2020 The Covid-19 virus is a genetic branch of the coronavirus, which has infested as an infectious disease amongst a severe global pandemic. This illness, declared to be a pandemic by WHO early this year, has spread across the world, causing deaths in large numbers and a buzzing sense of uncertainty among people. In response to the life-threatening pandemic, most countries have taken various measures, including imposition of a total lockdown that has had a detrimental impact across economies. This research paper studies the impact of the novel coronavirus on various macroeconomic factors of the Indian economy. The study is an analysis of data that is secondary in nature, using various statistical tools and techniques to come to a conclusion. Additionally, the impact of Covid-19 on one of the most vulnerable sectors of the economythe medium, small and micro enterpriseshas been shown with the help of a case study. The research also analyses various policy measures taken by the Reserve Bank of India and the Central Government of India, to ameliorate the economic shock and make a promising recovery of the Indian economy.

corresponding quarter of 2019. This negative impact on the GDP is partially an outcome of the coronavirus outbreak and the subsequent measures to prevent it, accompanied by significant dip in growth rate, the declining trend of which started much earlier. The financial, real estate and professional service sector was worst hit during the period of lockdown. During the first quarter of India's nationwide lockdown that was announced following it's first coronavirus outbreak, the economy was expected to lose over ₹ 32,000 crore (US$ 4.5 billion) per day (Wikipedia). The pandemic further weakened consumer demand and private investment in the March quarter. In the first quarter of 2020, only one week of nationwide lockdown was observed. Yet, the economic growth was estimated to be 2.1% in the March quarter. Growth was 4.2% in the fiscal year through March 2020, as compared to 6.1% in the fiscal year 2019. The total loss in output is estimated to be around ₹ 6 trillion based on the GDP at current prices for the fiscal year 2020. This growth rate is extremely poor compared to the estimated growth rate of 7.5 per cent at current prices for the same fiscal year. Economists expect the FY20 to see the worst economic contraction in four decades.In the manufacturing sector, output is expected to decline by about 70 percent. Other industries like metals andengineering have either reduced or shut operations. Machinery and equipment which includes automobiles, consumer durables and capital goods that contribute to a considerable portion of the GDP, are greatly impacted by the pandemic as the demand for their products has reduced significantly. Due to weak domestic consumption and consumer sentiment, there can be a delay in investment, which can further add pressure to the growth. India's GDP growth for FY2020-21 has been estimated to hit a 30-year low. The country's GDP forecast for FY21 by rating agencies and global institutions is abysmally low as well. GDP forecast has reduced to 2% from 5. 1% according to the Fitch Rating, that expects a global recession this year. Global ratings have slashed its growth forecast to 3.5% from 5.2% for FY21. The World Bank too has cut its growth forecast from 5% to 6% as shown in figure 3. The Asian Development Bank expects the country's GDP growth to strengthen to 6.2% in FY22 with the help of government reforms. According to CIRIL "India's fourth recession since independence, first since liberalisation, and perhaps the worst to date, is here." India's GDP forecast by credit rating agencies:

Impact on unemployment:
The unemployment rate has had a sudden surge due to the total lockdown imposed in the country followed by the policy of social distancing. The decline of economic activities implies slack labour market conditions that contribute to rising unemployment rates. Lack of funds for business and movement of migrant labourers back to their hometown has also resulted in massive unemployment. Between February and April 2020, the share of households that experienced a fall in income increased to nearly 46 percent. The total lockdown followed by the practice of social distancing resulted in job losses, specifically those pertaining to Indian society's lower economic strata. Several households terminated domestic help servicesessentially an unorganized monthly-paying job. During the nationwide lockdown, labour intensive industries reported the highest rate of unemployment as efforts were made to reduce manpower due to lack of funds owing to temporary stoppage of production and prolonged shortage in demand. The informal, unorganised jobs which employ 90% of the population were the first to be hit. As a result of proctor acts, curfews and closure of businesses, even the formal, permanent jobs were affected. All these factors have led to a steep rise in the unemployment rate from 6.6 per cent in January 2020 to 24 per cent in the month of May (in comparison to the 6.30 per cent rate in May 2019) as shown in figure 4. Impact on unemployment rate due to corona lockdown from January to May 2020: Agriculture, which remains the mainstay of the Indian economy has bucked the trend, adding workers in both March and April. Many daily-wage earners have returned to farming in the time of the crisis. As a result, the unemployment rate in the agriculture sector has reduced. However, the overall trend of unemployment has shown a sudden and steep rise. Although the unemployment rate is reported nationwide, the rates are highest in the red zones, mostly in urban areas at 29.22%, while rural areas are at 26.69%. As of the end of April, the highest unemployment rate of 75.8% was reported in Puducherry. Tamil Nadu stood second at 49.8%, Jharkhand at 47.1%, and Bihar at 46.6%. These states have the highest rates due to the prevalence of a large number of MSMEs and unorganised jobs. The latest estimate-till May 3rd from the Centre for Monitoring Indian Economy (CMIE) shows that the unemployment rate stands at 27.11%, up by over 20% due to the pandemic.

Impact on Trade:
The trade impact of the pandemic on India is estimated to be around 348 million dollars, as the country is among the top 15 economies most affected as slowdown of manufacturing in China disrupts world trade, according to a UN report. In India, the chemical sector is most impacted in terms of trade and stands at 129 million dollars, textiles and apparel at 64 million dollars, automotive sector at 34 million dollars, metals and metal products at 27 million dollars, leather products at 13 million dollars and electrical machinery at 12 million dollars. The only positive news that came along with the crisis was that India registered a trade surplus in 2020, almost after two decades. The last trade surplus was reported in 2002. However, this surplus is unlikely to sustain.

Imports:
Due to the ongoing pandemic, overall imports have plummeted a steep 47.59 per cent to $21.11 billion, owing to contraction of imports in 26 of the major 30 items that were imported into the country. The contraction remained widespread during the month of June, barring few commodities like vegetable oils, pharmaceuticals and pulses, suggesting that domestic demand remained low even after the lockdown was abolished. 1. Electronic goods saw the maximum fall with over 62 percent, followed by crude petroleum and its products.
2. Coal import of India in March stood at 15.74 million tonnes, which declined 27.5 percent over last year, owing to restrictions imposed at various ports in the wake of the Covid-19 outbreak in the country. 3. Organic and inorganic chemical imports into India were the least affected amongst commodities in the country's import market witnessing a decline of 35 percent in April 2020, to the same month in the previous year.
China is the world's largest exporter and second-largest importer, accounting for 13% of world exports and 11% of world imports. This will impact the Indian industry to a large extent as the dependence of India on China is huge in terms of cheap imports. The industries that are impacted the most are: 1. Pharmaceuticals: 68% of the active pharmaceutical ingredients are imported from China. 2. Electronics: 40% of India's electronic machinery and equipment is imported from China. Although India has increased production of low-end electronic components, import dependency on China is its major limitation. 3. Solar industry: 80% of India's solar cells and modules imports are from China. This will result in delaying many projects that are based on solar energy. 4. Consumer durables: Consumer durables are the products that have a long use life such as air conditioners, refrigerators, and other household appliances. Around 45 per cent of consumer durables are imported from China. 5. Automobile sector which accounts for 7.5 per cent of India's GDP is already facing slowdown. The coronavirus lockdown has made the situation worse for the auto sector, as 10 to 30 percent of automotive components are supplied from China.

Exports:
Indian exports were already under stress in the last financial year, with a best-case scenario exhibiting at-par performance with the previous financial year. The Economic Times reports that the country's exports worsened over the first quarter of this year and in June, "shrank 12.41 per cent to $21.91 billion led down by lower shipment of textiles, petroleum, engineering goods and jewellery." Owing to a steep decline in shipments of leather, gems and jewellery, and petroleum products, India's exports plunged by a 34.57 per cent in March, bringing down the total exports in 2019-20 down to USD 314.31 billion.
Merchandise exports also fell drastically, standing at USD 21.41 billion in March. It declined by 34.57 per cent, compared to USD 32.72 billion in the same month last year, showing the steepest fall since the 2008 crisis.
Slowed domestic and international demand for goods has impacted Indian SME(s) to run their businesses and factories. Already the sector was struggling with slowing domestic demand over the last few quarters, and now after the coronavirus outbreak, the sector has gone into a demand crisis. The business sentiments have gone negative, and people are refraining from making new purchases unless it is a necessity item. Factories have stopped their production activities, and sales have slowed down exponentially. Even when it comes to exports, SME(s) are not receiving any fresh orders as a major chunk of their business used to come from the European Union (EU) and the USA. This is making it difficult for SME(s) to run the business.
China is India's 3rd largest export destination and accounts for around 5% share. The impact may result in the following sectors like organic chemicals, cotton, plastics, fish products, etc.
Most Indian companies work in sectors including industrial manufacturing, manufacturing services, IT, BPO, and logistics, and are concentrated in the eastern parts of China.
Some sectors of India have been negatively affected by the outbreak of coronavirus in China, including shipping, electronics, pharmaceuticals, automobiles, textiles, etc.
Dip in exports and imports narrowed the trade deficitthe difference between imports and exportsin March to USD 9.76 billion, the lowest in the last 13 months. According to a CLSA report, pharma, chemicals, and electronics businesses may face supply-chain issues and prices can go up by 10 percent. Commodities like upstream and downstream oil companies, metals, etc could be impacted by lower global demand affecting commodity prices. India's export market is interlinked with global value chains to a large extent, with India being one of the leading exporters of agricultural and other essential commodities such as pharmaceuticals which will be in demand in the post-pandemic period.

Impact on financial markets:
The financial sector of India is facing challenges on multiple fronts in the time of this crisis. Due to fear and the practise of social distancing, very few customers are being served in the physical branches of banks, putting additional strain on other channels like telephone, online banking and social media. A large number of people are frantically trying to contact their financial services providers with questions, queries, concerns or to request some special measures as their incomes have been impacted by the pandemic. Moreover, many have lost their jobs, seen their businesses shut down and their incomes diminish, in addition to living with the constant fear of defaulting on loans, missing mortgage payments and falling into a debt trap. Businesses need additional help as their revenues have dropped drastically. Fintech companies are comparatively well-placed to deal with remote working requirements and digital working, although some of them are uncertain of funding in this volatile period. Additionally, many companies are offering services to customers and businesses free of cost, or innovating to create new products that meet specific needs, during this crisis. The current situation requires constant and careful handling from financial institutions as they have the duty of reassuring consumers, responding to their concerns, and restoring their trust during this volatile period.

Banks:
The Reserve Bank of India (RBI) has provided liquidity to banks in the form of reduced rates for lending, and the Indian government is offering credit guarantee to micro, small and medium sector enterprises (MSMEs) and other damaged sectors. Banks have also been asked to "offer a moratorium to borrowers to pay instalment and interest for three months," while relaxing the provisioning norms (Money Control).
These steps taken by the RBI would help the banks and borrowers to tide over the immediate liquidity requirements and the need for cash as the occurrence of the pandemic and the impact of lockdown resulted in reduced or no income for the borrowers of the banks. Despite the measures taken, banking institutions are expecting a long-term negative impact on their economic activities. The banks have a risk of facing an increasing number of bad loans or non-performing assets (NPAs) if the borrowers are unable to generate sufficient cash. There could be an aggregation or accumulation of provisions and losses in the period in which the exemptions are lifted. If the pandemic doesn't end soon, there could be withdrawal of most deposits, resulting in the replacement of low-cost deposits with high cost borrowings. This might have an adverse impact on net interest income, spreads and margins. Banks may not find proper avenues for lending due to the crisis, resulting in either excess funds lying idle or being invested in low yielding investments. There would definitely be many challenges faced by banks. However, if the banks have robust risk management functions and can partner with borrowers who show potential and can adapt to the 'new normal', there would be enough positives and benefits. The key would be to identify the right set of borrowers and partner with them to help them through this entire cycle.

Non-banking financial companies:
NBFCs are expected to face challenges similar to banks with respect to assets. However, maintaining capital and liquidity would be a greater challenge for the NBFCs. Some of them need to create provisions to be computed on the basis of expected credit losses. Accordingly, they also need to compute provisions based on losses expected in the near future. Generally, lenders use the past history of defaults and losses to compute the expected credit losses and adjust them for the future based on their trends with the macroeconomic factors. Since the impact of COVID-19 is unprecedented, it will be a challenge for them to estimate the expected credit losses. Many regulators have issued guidance requesting the lenders to look at a longer-term view rather than a short-term view while computing the provisions. Further, some of the NBFCs give loans to small businesses for which repayments cannot be estimated in this situation as there would be higher losses. NBFCs which have robust collection systems, however, might perform better than their peers. Also, the provisions would depend on the areas where the NBFCs have been lending. For example, NBFCs operating in relatively less affected areas would have lesser provisions and vice versa.

Insurance:
COVID-19 and the subsequent lock down imposed has impacted the general insurance companies much more than the life insurance companies. Broader impact is expected as follows: 1. There would be a steep fall in the premium income, particularly in motor loans, as new car production and sales have stopped due to the lockdown. However, the claims are also expected to be lower. 2. There would be higher MediClaims in the future, resulting in higher costs. 3. There would be constraints on capital raising as liquidity of the parent bank.
On the life insurance side, there could be higher claims and the actuarial assumptions could undergo changes due to changes in actual experiences.
On an overall basis, entities in the financial services industry would be under stress. However, they should work cautiously and look for opportunities to grow. Strong risk management processes, robust collection policies, effective cost control measures, and increased use of technology would help entities in the financial services to pass through these testing times. Till the time there is no solution for the coronavirus in terms of a vaccine or an antidote, the financial sector will have to live with the issue, practice social distancing and carry on business to achieve the desired results.

Stock Market:
The stock market witnessed significant drop and volatility in the major indices during February and March 2020 as shown in figure 6. On 23rd March 2020, stock markets in India witnessed their worst losses in history. SENSEX fell 4000 points (13.15%) and NSE NIFTY fell 1150 points (12.98%). However, on 25th March, one day after the announcement of a complete 21-day lock-down, SENSEX saw its biggest gains in 11 years, adding an enormous value of ₹ 4.7 lakh crore (US$66 billion) crore for investors. In April and May, the Indian market primarily responded to the developments in the US stock market, which was then comforted by monetary accommodations of the Federal Reserve. On 8th April, receiving a positive indication from Wall Street about the novel pandemic reaching its peak in the US, the stock markets in India once again rose steeply. By 29 April, Nifty reached the 9500 mark.

Impact on inflation:
The impact of coronavirus on the inflation rate of the country is ambiguous. The rate of inflation increased significantly during 2019. Since 2014, India's CPI (consumer price index) inflation has somewhat remained in the band of 2-6 per cent. In comparison to the aftermath of the global financial crisis 2008, CPI inflation was on a downward trend as shown in Figure 7. Due to a number of push and pull factors, it is difficult to govern which factors affect the inflation of a country like India. During the present crisis, inflation is expected to remain dormant. This would give RBI some flexibility to go for accommodative monetary policies. Outlook India reports decline in food prices, "offset by the potential cost-push increases in prices of non-food commodities." The main reason for this is supply disruptions from both domestic producers and imports due to the imposition of the total lockdown followed by the practise of social distancing. Retail feature expansion in March 2020 tumbled to a 4-month low of 5.9 percent, in accordance with market predictions, 0.7 percent lower from a month back and 3.1 percent higher from the comparing month, a year prior (Outlook India).
Pertaining to falling crude oil prices, weaker consumer demand for non-essential products and lower food prices caused due to the pandemic have helped in moderation of the inflation rate. However, retail inflation gained momentum in June, with increasing prices of food and fuel items. The Central Bank, whatsoever, would still ease rates due to economic slowdown caused by coronavirus-induced lockdown. Annual retail inflation rose to 6.09% in June, compared to 5.84% in March.

Impact on government budget: a. Pre-Covid situation and the impact of Covid:
The government budget deficit as a percentage of GDP jumped by more than a percentage point from FY18 and FY19 as shown in figure 8. The increased government spending and reduced tax revenue during the last fiscal year, there has created a large fiscal gap. The recent budget deficit has already breached the target of 3 per cent set in the Fiscal Responsibility and Budget Management (FRBM) Act of 2003. The outstanding public debt as a percentage of GDP has been rising ever since 2014. Thus, the state of the Indian economy on the eve of COVID-19 crisis, was already weak. This has increased the vulnerability of various segments of the Indian economy including government budget. The targeted fiscal deficit for the current financial year was revised to 3.5 per cent in the recent budget. Some states do not even have enough money to pay salaries in the near future. Keeping in mind the high deficit numbers at the state level, it can be said that most states have not come out with their stimulus package even after the lockdown ended. According to estimates, the Indian economy was expected to lose over Rs. 32,000 crore (US$ 4.5 billion) every day during the first 21 days of the lockdown. Jefferies Group said that the government can spend almost INR 1.3 lakh crore (US$ 18 billion) to fight the devastating impact of the pandemic. The current collective fiscal deficit for both the centre and state governments stands at 6.5 per cent of the GDP (as of June 2020).

b. Post COVID-19 impact:
The pandemic is likely to impact the fiscal deficit situation of the country through two channels. First, the need for the government to allocate a sizable portion of its budget to fight the pandemic including expenditure on health, social security and other payments needed to control the economic fallout of the event. Second, the consequent fall in economic activity will lead to fall in tax collections. This effect has already been witnessed, as the tax collection has gone down drastically, forcing the government to cut down costs. So, not only will the expenditure increase, but also there will be a constant fall in tax collection, further increasing the fiscal deficit.
Case study of impact of COVID-19 on the MSME sector: What are MSMEs? Medium, small and micro enterprises are defined in terms of investment in plant and machinery. The investment limit is given in chart 1.

Source: Indianexpress.com.
In February 2018, the Union Cabinet decided to change the criterion used to define MSME to "annual turnover", which could now be estimated better, considering the imposition of GST. In spite of the fact that this has not yet been formalized, a miniaturized scale undertaking will be unified with a yearly turnover not as much as INR 5 crore; a little venture with turnover between INR 5 crore and INR 75 crore; and a medium endeavor with turnover not as much as Rs 250 crore (Indian Express). It is estimated that there are 6.34 crore MSMEs in the country, out of which 51 per cent are situated in rural areas. The sector provides employment to over 114 million people and contributes to more than 30 percent of the GDP.

Problems of MSME in India:
The MSME sector has been one of the most vulnerable sectors of the Indian economy since a long time. The MSMEs face a heap of problems in their day-to-day functioning, and in terms of sustaining in the marketplace. Some of their main problems include: 1. Non registration: Most MSMEs are not registered anywhere due to the small sizes of their establishments. Most micro enterprises do not even qualify for the GST threshold. 2. Unorganised sector: Most of the MSMEs belong to the unorganised sectors and thus, they do not have to maintain accounts, pay taxes or adhere to regulatory norms. This surely brings down their costs, but reduces the government's ability to reach out to them in order to provide support. 3. Lack of financing: Most of the MSMEs run on very little finances and most of their borrowings are from informal sources which leads to higher costs of borrowing. 4. Lack of advanced technology: the owners of MSMEs are either unaware or cannot afford advanced technologies of production. Their techniques of production are outdated, and they use older methods in the field of fabricated metal and textile. 5. Lack of marketing channels: channels-The MSMEs are not adopting the innovative channels of marketing.
Their advertisement and sales promotion techniques were comparatively weaker than the multinational companies. The ineffective advertisement and poor marketing channels lead to very poor sales.

How has COVID-19 made things worse for MSMEs?
MSMEs were already struggling due to dwindling revenues and capacity utilisation in the previous years. This sector mainly relies on day-to-day business activities to stay afloat, which makes it the most vulnerable owing to the lockdown and a decrease in demand. The total lockdown questioned the existence of MSMEs because unlike bigger firms, these firms do not have enough cash or liquid assets to wait out the crisis. Though the bank dues have been deferred, MSMEs will have to "pay their statutory dues, wages and pressing creditors," as well as decreased manpower in the wake of a mass exodus by migrant workers and their loans worth INR 2.3 lakh crores are at a "high risk of becoming non-performing" (Express Healthcare). The need for working capital will increase as payment cycles are likely to be extended, generating an issue of cash flow. These companies are too small to have enough of a cushion to last through this novel pandemic. The lockdown added to their hardship as many of these companies have been asked to shut down or curtail operations while still paying employees, apart from meeting costs for taxes, power, and other utilities. The most emerging challenge during the lockdown period as well as in the post COVID-19 period would be meeting fixed costs. While this will be burdensome in absence of regular funds flow, the problem will be more intensified if Banks/NBFC create pressure on MSMEs for repayments of the dues. They are also suffering due to the increase in cost of raw materials as cheap raw material cannot be imported pertaining to the pandemic. Since these small firms formed the supply chain of the large companies that went bankrupt, their cash flows and ability to service loans also took a beating. The IL&FS debacle further choked the credit lines while the slowdown in the economy impacted their revenue streams. The pandemic has thus come as a last nail in the coffin for this vulnerable sector, which contributes to over 30 per cent of the GDP.

Demands of the MSMEs:
1. According to reports, MSME representatives have appealed to the government for concrete action including tax concessions, fast and easy credit, GST write-offs, reimbursement or concession for wage-guarantee. 2. Small and micro enterprises want the government to allow payment of GST arrears in instalments along with the current due. They want this to be accompanied with a six-month moratorium without cancelling the GST registration. They even demand penalty and interest waived off for the delayed payment. 3. Some SME associations have urged the government to allow units that have the facility for social distancing to operate, during the lockdown extension.

Measures taken to help the MSME sector:
The post-pandemic world is expected to create a dearth of capital, in response to which financial institutions need to lend a helping hand to the MSME sector. The government has already taken certain steps to support the MSMEs. These steps include:

Short term measures/ policies: Atmanirbhar Bharat financial package:
In May, the Indian government announced the Atmanirbhar package at a value of INR 20-lakh-crore, to support the Indian economy. This also aims at supporting the MSME sector. It includes a provision of emergency working capital, creating a dedicated fund with a INR 10,000-crore corpus, among other measures. About 45 lakh MSMEs are expected to gain from this proposal. However, implementation will be challenging particularly because financial aid to the MSMEs will not be effectively distributed as many of them are unidentified, and it is difficult to target those that are most in need.

INR 3 lakh crore collateral-free loans:
Banks and NBFCs will offer up to 20 per cent of total outstanding credit as announced on February 29, 2020, to MSMEs. Units with up to INR 25 crore outstanding credit and INR 100 crore turnover are eligible for taking these loans. These loans will have four-year tenure with a moratorium of 12 months on principal payment. The scheme can be availed till October 31, 2020. The government will provide complete credit guarantee cover to lenders on principal and interest amount (Financial Express).

Clearing MSME dues:
the Indian government and the PSUs will release all pending MSME dues within 45 days. Fintech enterprises will be used to further boost transaction-based lending using the data provided by the e-marketplace.
them one of the most vulnerable sectors of the economy especially during the coronavirus crisis where the demand has fallen by a large margin, affecting their day to day business. The MSME sector provides employment to a large number of people in the country. It helps in decreasing regional disparity as many of these enterprises are established in rural and backward areas. In the current scenario, there is a pressing need to work towards selfreliance of the country which would be possible by empowering the MSME sector; if this sector is made stronger, it can prove to be a boon for the Indian economy in the near future. In case this sector is not protected in India, it is likely that more than 25% of these enterprises will shut down, which will leave a large number of people unemployed. The RBI and the government have taken various measures in order to protect the MSME in India, however, stronger measures are required to prevent the MSME sector from shutting down completely. The RBI has been trying to pump money into the MSME sector but given the structural constraints, it has had limited impact. The government must provide more tax relief (GST and corporate tax) and provide liquidity to rural India to boost demand for MSME products. The government must identify the MSMEs and devise a long-term strategy for the sustenance of the sector in order to help them survive the pandemic and its aftermath.
RBI has also been conducting many other monetary operations for better liquidity management as it scrambles to keep the banking sector healthy, in a bid to support the economy in the wake of the novel coronavirus pandemic.

ii. Economic package:
The government announced the economic stimulus package of INR 20 lakh crore, which makes up 10 per cent of the GDP as on 12 th May, 2020. This package consisted of a mix of reforms, infrastructure building, support to businesses that are suffering and some amount of direct cash support. The package also included collateral-free loans, changes in FDI policy, provident fund contribution and measures to increase ease of doing business. With most announcements being related to supply, this policy did not address short term demand concerns, which may pull down the economy even more. While the economic package was criticised by quite a few on the grounds of being inadequate, it also received neutral and other positive responses as for the necessary caution the government demonstrated in its spending.
iii. Protectionism: India changed its foreign direct investment (FDI) policy on 18 th April, 2020 in order to curb opportunistic acquisitions of Indian companies due to the pandemic. China could take advantage of the falling financial markets, leading to hostile takeovers. The new FDI policy does not restrict markets, however, the FDI from neighbouring countries that share a land border with India is under scrutiny.

iv. Alternative to China:
The government of India is using this as an opportunity to attract companies that are finding an alternative to China. A total of at least 461,589 hectares has been earmarked for the purpose, as reported by The Economic Times. The government is also looking at the "China Plus One" strategy, which suggests that instead of only investing in China, diversification of business into other countries is a safer and more economical option in the longer run. Following the pandemic, numerous Indian companies are adopting this strategy by finding alternative supply chains.

Conclusion:-
The coronavirus pandemic has paralysed the Indian economy to a great extent, affecting almost all macro variables of the economy negatively. Although, we might not know the exact impact of the virus on the Indian economy until the pandemic is over, it is certain that the country would have a hard time coping with the deep recession complemented with a sharp fall in the GDP and surge of the unemployment rate in the country. The long-term impact of the pandemic will be a result of how the masses and the government react to the prevailing situations and the changes made in policies and businesses. Price increases could occur in sectors like agriculture so measures should be taken to maintain adequate harvest and keep the supply chain operating smoothly. The risk of a rating downgrade and fiscal deficit spike will make it harder to borrow and spend in the future. The government must increase the scale of direct benefits to specific target groups like the MSMEs and the unemployed by other schemes like MNREGA andJan Dhan Yojana. There should also be a temporary increase in the quantity of food distribution to ensure the food security of the vulnerable groups. Given the limited nature of available resources and other limitations, the policymakers in India have to carefully weigh the policy options and choose only those that have the largest payoffs in the short-run as well as long-run.