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Impact of COVID-19 on the Indian oil and gas sector

Coronavirus has so far affected more than 200 countries worldwide. There are around 24 lakh total cases and more than 1.5 lakh have lost their lives. It has affected almost all economies across the globe. The global economy was already in a precarious position in 2019, the risk of a global recession in 2020 is very high as nations cease economic activity. Once the epidemic is controlled, the shape and speed of the US and China will be the major factors determining the nature and traction of the global economy.UNCTAD in its latest report predicted that the major economies least exposed to the recession would be India and China.

India's real GDP in 3Q 2019-2020 was the lowest in six years and the outbreak of the virus posed new challenges to the economy.

Measures to prevent the spread of the virus, such as nationwide lockdown have put economic activities at a halt and may affect both consumption and investment. The three major contributors to Indian GDP are private consumption, investment, and external trade and it is expected that all three contributors will be affected by the epidemic. However, the IMF predicted that India would grow at a rate of 7.4% in the financial year which would start in April 2021. But for this to happen, controlling the epidemic, ending the lockdown, and reducing the already existing stimulus in India is necessary, and some initial steps should be taken on monetary policy and fiscal policy. Due to the outbreak of the virus, there is a significant effect on consumption which is the largest component for the demand side. In virus-infected nations, China is the largest import source for India.

There may be a shortage of raw materials in China due to the shutdown of factories and consequent delays in the supply of goods from India. Falling oil prices is a positive outcome for India. 80% of the oil required for the Indian economy is met through imports, so a fall in prices could lead to an additional income of INR 390 billion.

Sectoral Impact:

India is the third-largest energy consumer after the United States and China, 5.8% of the world's primary energy consumption in 2018. It has 619 MMT(2019) crude oil reserves and imported oil of ₹7659.50 billion from April 2019 to Jan 2020. It is expected that global oil demand will fall from 13.7% in Q1-2020 to 1.2% in Q2-2021. (Sectors include Non-Conventional Energy, Petroleum and Natural Gas.)

As crude oil prices have fallen, India's import bill will be reduced and there will be less impact on the Indian oil and gas sector as oil and gas are essential. There is no manpower shift or apex effect, but the future CAPEX effect is expected. The export of diesel and petrol to neighboring countries has come down due to lockdown and low demand. For transport fuels, there will be a perceptible slowdown due to the moderation movement of goods and the drop in passenger movement. Turbine fuel has been affected due to the shutdown of international and domestic flights.

There will be no drop in LPG demand for domestic demand, but there may be a slight drop in industrial demand. Natural gas will be affected by the supply chain perspective.

Recommendations:

It is a very crucial time for the government to intervene It should ease tax and compliance issues, ease the financial stress on oil and gas companies, and support the customers who are in need. The government must roll out GST for the fuels and gas category, it is for long run support. It should look after daily wagers and laborers by providing adequate wages. Banks should provide some cash to oil and gas companies to avoid any short-term working capital issues.

Impact of COVID-19 on the Indian hospitality sector

The Indian hospitality industry is undoubtedly one of the biggest casualties of the COVID-19 outbreak as demand has declined to an all-time low. Global travel advisories, suspension of Visas, the imposition of Section-144 (prohibition against mass gatherings), India like most other countries are on lockdown, the ramifications of which are unprecedented. Foreign Tourist Arrivals (FTAs) into India (particularly leisure travelers) started softening in February, as the spread continued its unabated movement to other countries. Following suit, the Indian Government suspended travel visas (with a few exceptions) till 15th April 2020, which in all likelihood will be extended. Even if it is not, the paranoia surrounding the events will continue to have a major impact on travel.

India first started feeling the ripple effects of the global COVID-19 turmoil towards the end of February 2020, which worsened at the beginning of March. Occupancy across hotels in key cities declined rapidly and as per our estimates has declined by a staggering 45 percentage points compared to the previous year. Such a steep decline in such a short period has never been witnessed by the sector. The overall occupancy in the branded hotels segment in 2020 is estimated to decline by 16.7 – 20.5 percentage points over 2019. Besides the actual business loss, the hotel owners will also incur losses due to fixed operating expenses, debt repayments, interest payments, and several other compliances required to be undertaken as part of the sector. This sector employs 12.75% of the country’s workforce. India’s COVID-19 may cause 38 million (which is 70% of the total workforce) job loss in the hospitality industry.

The purchasing power of clients will differ as income will decrease and prices will increase. This outbreak will cause greater income inequality and unemployment. Clients will spend less on non-essential activities which will directly hamper this industry.

Post COVID-19 Scenario:

A business will suggest employees work from home, People will refrain from traveling which will impact the travel business post-pandemic till the end of the year. The industry could take up to 10 months to recover after the outbreak is over. The same goes for the restaurant and hotel business as well, people will hesitate to eat outside immediately post the pandemic scenario. It will take some time for people to update their perception about eating outside, traveling, or staying at a hotel. Safety/Hygiene will be of utmost priority for customers to post the pandemic, so business owners will have to reform their policies and come up with strategies to survive in the industry and gain competitive advantages.

Some of the changes that will happen post-COVID-19 scenario: -

  • Digital Transactions will increase in this industry
  • Tourism will increase in the domestic sector whereas international travel will see a significant decrease
  • Hotels will start offering heavy discounts
  • Restaurants will increase prices
  • Essential product prices will increase

Impact of COVID-19 on the Indian BFSI sector

As a reason for the lockdown, the banks will be impacted heavily due to the recessionary and low flow of funds and investments. There will be heavy defaults on the loan i.e.: - Increase in the NPA of the banks and NBFC, this is due to the unavailable of the funds due to the lockdown. As a result, the Lender of last resort will fluctuate the interest rates and income for the financial institutions will be severely affected. The current situation is leading the banks for fewer transactions and as a cause, the domestic and international transaction fee income is being declined to the banks. As a contradiction to the banks and NBFC are following two different reporting systems, i.e:- Banks are being followed the Indian GAAP(Globally Accepted Accounting principles) and NBFC follows the Indian Accounting Standards,  this will cause a difference and reflect the wrong figures in the statements of accounts. In the short term, the customers will give the highest priority to savings rather than the investments, as a cause the there will be funds availability will be higher, but only for the short term period. Here, after the lockdown, the people will choose the endowments policy, which will cause the flow of endowments markets.

In this scenario, the banks should maintain adequate funds for the availability of their customers respectively. In the country, liquidity can be maintained and regulated by the Reserve bank of India, this can be achieved by the Monetary policy committee of the RBI, with the alignment of Fiscal policymakers. Here the competition between the Large capitalization and small, newly established companies arises due to the public confidence level and the security of funds. The customers of the small banks will shift the work to the large banks for the safety and the security of funds. Retaining of the customers and the fund's availability will be the biggest challenge for the small banking systems. The risk of liquidity will arise for all the banks, NBFC, and Insurance companies. The liquidity risk may be addressed very sensitively for the customer's availability. This liquidity risk will vary from short term period to the long term period.

As the moratorium has been raised on the repayment of the EMI, the financial institutions should maintain the adequate balance between the availability of funds between the no repayment of the monthly installments and the borrowers from the bank. In the upcoming period, the interest rate will be changed very frequently, as a result, the banks should be prepared with adequate capital and measures to provide the capital in the market accordingly to the interest rate fluctuations. The credit risk will be a major concerning issue for the banks. This need tot is addressed by the banks from the sectors like Automobile, consumer goods, constructions, government sectors,  infrastructure, and SME that need to be addressed and prepared in credit risk.

Post lockdown, the cash-intensive business will be reformed into the completely digital platform for the collection of the money from its customers and the vendors respectively. There will be a new way of working remotely by the employees and the initiatives of automation will play a crucial role for the banks, where monotonous and repetitive tasks are involved in the operations. Banks need to be complete digitalization, which will enhance the remote working of the employees and the reduction of the work lace in the organization, overall the cost reduction will be a huge benefit for the final institutions. It is also important to provide the adequate facilities of cybersecurity for the servers and control systems of the banks. Overall, the banks need to be monitored in keen on the application of its decisions and updating the changes accordingly to the changes in the market conditions.

The change of the asset classification needs to be done for the effective utilization of the monitoring of the assets, its repayment, NPA, and its allied activities. This will help the banks in identifying the stressed sectors from the free of liquidity crisis sectors. It is also important for the banks to be extended repayment of the period for the company and its customer requirements. All NBFC to be provided with more liquidity, when compared to the other sectors of the industry, because from the first NBFC is facing a huge liquidity crisis heavily. Banks and other financial institutions can be survived if the Tax holidays is being provided by the Statutory body in the nation. The moratorium should be extended additionally to the other 3-6 Months period of time. One of the most affected sectors is the MSME and it should be considered as more than all prior sectors. The biggest weapon, RBI can use in this crisis is the Issue of the commercial papers for the long term and make the liquidity available in the nation freely.

The 3 thing I liked KPMG Report writing is as follows:-

  • The tabular presentation of the data is very attractive and user friendly of the data.
  • The classification of the data is understandable, and memorizable easily.
  • The use of simple and understandable terminology in the report makes the data to read more.

The 3 things as a business author, my thought process today compared to yesterday is as follows:-

  • I need to improve my way of presenting the data with more attention-getter from the reader.
  • I can present the data insight deeper and in a more understandable way.
  • I can see my change from yesterday and today's report.

The 3 thing that I want to improve in my business writing is as follows:-

  • I can be a good business writer with more use of resources in the way of presenting data.
  • It is much important, to make a reader read our writings, which can be possible only when we make it neat and legible.
  • The deeper a=insights of the data should be brought out, with more supportive

Impact of COVID-19 on the Indian power sector

On March 25th, 2020, India started a phenomenal 21-day lockdown to battle the spread of COVID-19. In these upsetting occasions of 'social separating' and 'telecommuting', the centrality of power in controlling our present and future social orders is more clear than any other time in recent memory. Nonetheless, the Power sector isn't insusceptible to the unfavorable impacts of the pandemic. The drawn-out effect of the present circumstance would just get evident with time. In any case, some early effects of COVID-19 on the Indian Power sector are as of now getting clear.

Effect on the framework:

In India, dispersion utilities have a lower duty for residential and rural customers,  even underneath the normal expense of supply, when contrasted with that for industrial and commercial consumers. Table 1 gives the electricity duty rates in Delhi for selected consumer categories to feature these distinctions. Thus, for several distribution organizations, the lower duty paying consumers are cross-sponsored by industrial and commercial consumers.

The COVID-19 lockdown has prompted closed down of everything except fundamental business exercises across the nation. Around 1.3 billion residents are obliged to stay inside the limits of their homes and, by and large, just permitted to telecommute. Thus, the power request from industrial and commercial consumers has decreased fundamentally while the residential demand is expected to have increased. As indicated by the Power System Operation Corporation of India (POSOCO), The power met on March 16th, 2020 – which can be considered as a nothing new situation – was 3494 MU when contrasted with 3113 MU on March 23rd, 2020 every day of willful curfew. It further decreased to a range between 2600-2800 MU between March 25th to March 31st, 2020.

Thus, firstly, a key risk from the COVID-19 pandemic for the already struggling distribution companies in India arises from the loss of revenues due to the reduction of demand from the commercial and industrial customers as well as the inability to cover the cross-subsidies provided to the lower-tariff paying consumer. Secondly, the utilities would also have to account for the expense to comply with any ‘must buy’ commitments that they have with generators with long-term power purchase agreements. The true and full extent of this risk would only be known once a quantitative analysis is conducted when this crisis is contained. Thirdly, at an operational level, distribution companies would have to account for deviation in demand and supply patterns at a temporal and locational level. Finally, during this period, critical infrastructure such as electricity networks would have to be run with minimum employees.

The trade on the wholesale power market comprises just 4.3 percent of the total electricity transactions. However, the transactions through the power exchanges have grown over the last decade. The Indian Energy Exchange (IEX) has seen a growth from 2616 MU in FY 2009 to 52,241 in FY 2019.

Now, the exchange the discount advertise is in four market sections 1) Day-Ahead Market 2) Term Ahead Market and 3) Renewable Energy Certificates 4) Energy-saving certificates. Recently, the Central Electricity Regulatory Commission (CERC) concluded the guidelines for executing continuous markets. This half-hourly market will empower the intra-day exchange of power, permitting alteration of age and utilization profile during the day. Before the COVID-19 pandemic, it was declared by CERC that the continuous market would be operational from April first, 2020. Be that as it may, the beginning date has now been postponed by two months to June first, 2020. As indicated by media reports, because of the COVID-19 pandemic, some necessary preliminaries couldn't be finished. This postponement in the ongoing business sector usage is probably going to have a genuine, antagonistic effect on the Indian Power market.

.Another effect of the COVID-19 pandemic on the Power markets is regarding the market dynamic. It tends to be seen that there is a dunk in the clearing volume and the market-clearing cost, which agrees with the step by step expanding shutdown estimates taken by the administration as a reaction to COVID-19 (See Figure 2). In this manner, the decrease sought after because of the lockdown is reflected in the volumes exchanged on the power advertise and the clearing cost.

Impact of COVID-19 on the Indian healthcare sector

On November 17, 2019, the first case of China in the Hubei Province went unrecognized. In December, eight more reports emerged with investigators pointing to an unknown virus. The virus continued to spread in the next three months via direct and indirect communication with many people in Hubei. Because we live in a global society, it is suspected that foreign travel has brought the virus all over the world. It reached such a scale that by March 2020, WHO declared COVID-19 a pandemic as it reached to 784,794 cases worldwide and caused 37,788 deaths by Mar 30, 2020. The first case was registered in India on 30 January. By March 30, India reported 1251 cases and 32 fatalities.

There were approximately 2,489,956 global cases of COVID-19 as of April 21, 2020. More than 653,188 people had recovered from the outbreak, while 170,552 died. The three countries hit hardest by the pandemic were the United States, Italy, and Spain.

As of 21 April 2020, India recorded 18,658 cases of COVID-19 coronavirus, with over 3,273 recoveries and 592 deaths. Since 2 March 2020, the country has been registering new cases of the virus regularly. Although the number of new cases has risen, some patients who tested positive under quarantine have gone through full recovery.

Since early March the western state of Maharashtra had the largest number of coronavirus cases. The government was making contingency plans to increase the country's COVID-19 research capacities to better cope with the crisis. At the same time, on March 25, the nation went into complete lockdown, making it the world's biggest, with 1.3 billion people confined. This was extended further until May 3, 2020.

Indian Healthcare Sector

India pharma’s global standing:

The Indian pharmaceutical industry has been a world leader in generics, both internationally and in domestic markets, substantially contributing in volume to the global demand for generics. Made-in-India drugs given to industrialized economies like the US, EU, and Japan are known for their protection and efficiency. In recent years, India has seen increasing competition from China, which it has been able to exploit due to its inherent cost advantage, manufacturing intermediates and APIs at a much lower cost than those in India, leading to a steady rise in API imports from China to India, which in turn has resulted in the depletion of domestic production capacity for some main APIs.

Risks from India pharma’s China linkages:

India's high import reliance on China (around 70 percent by value) has become a major threat to India's manufacturing of healthcare and the global supply chain. Although Indian pharmaceutical companies have gradually migrated up the value chain over a period of time to concentrate on higher-margin value-added formulations, this over-reliance on China has increased the threat to the nation's health security as some of these vital APIs are crucial to mitigating India's increasing disease burden.

Supply chain disruption for India pharma:

Any disruption in the supply chain of APIs will lead to significant shortages in India's supply of critical drugs. Some of the vital APIs are specified in the National List of Essential Medicines (NLEM) for categories of high-burden diseases such as cardiovascular diseases, diabetes, and tuberculosis. In addition, for many antibiotic APIs developed via the fermentation process, such as penicillin, cephalosporins, and macrolides, the current demand is largely dependent on China.

The increased reliance on low-cost API is mainly due to China's comprehensive efforts toward developing economies of scale, easing regulations for bulk drug manufacturers, availability of low-cost services, building process efficiencies, and supporting manufacturers in the form of subsidies, low taxes, and fiscal incentives. India has significantly lost its production of APIs due to insufficient government support and API-focused infrastructure combined with the difficulty in obtaining approvals for the establishment of a manufacturing plant, delayed clearances of pollution, high costs with low availability of services, regulatory and price control schemes are some of the main challenges faced by the bulk drug industry.

Major earnings cuts ahead for pharma firms:

Edelweiss Securities says the novel coronavirus, or COVID-19, has triggered significant disruptions to the supply side in various industries, earnings will be reduced by 10-15%. As a business, pharma has emerged as a strong contender to push the next rally leg, whenever it comes. In the last 10 days, pharmaceutical stocks have seen a major upsurge in anticipation. That is not only true for India, but it has also performed well for pharmaceutical firms internationally too. While most companies will come back from the last 5 years of underperformance in the short term, the leader will be special this time around.

Relative stability, reasonable valuations:

According to HDFC Securities, Indian pharmaceuticals have been fairly resilient to the COVID disruption and are likely to gain from favorable currency tailwinds and secure prospects for India and the US. India's growth has increased (as of MAT Mar'20, around 10 percent rise for IPM). It predicts growth of 11 percent over the next two years for covered companies. US pricing remains a stable market and the regulatory issues are well known. The pharmaceutical market is up ~1% YTD, outperforming the Nifty Index by 28%. We favor high exposure stocks in India, as they provide greater visibility of earnings, backed by fair valuations.

Risks:

  • a prolonged lockdown may impact demand and manufacturing
  • delay in US FDA travel advisory plant resolution
  • currency risk and subdued demand on the EM markets
  • delay in main approvals

Impact of COVID-19 on the Indian transport and logistics sector

On March 11, 2020, the World Health Organization (WHO) has declared COVID- 19 a worldwide pandemic. 1.3 billion in India alone are under lockdown to contain the spread of the virus. Many countries have closed their borders and imposed curfews — leading to sharp reductions in transport demand also on the regional and continental levels.

COVID-19 is in decline in China. There are now more new cases a day in Europe than there have been in China at the epidemic’s peak and Italy has surpassed it because of the country with the foremost deaths from the virus. It took 67 days to succeed in the primary 100,000 confirmed cases worldwide, 11 days for this to extend to 200,000 and just four to succeed in 300,000 confirmed cases — a figure now exceeded.

Impact of COVID -19 on Indian Economy:

India’s GDP has been on a uniform decline after peaking out at 7.9 in Q4 of FY 2018 to 4.5 in Q2 of FY 2020. Before the pandemic, Banking, and Financial services were facing massive problems with the collapse of IL&FS, DHFL, and Yes Bank fiasco. Private Banks, NBFCs, and even Micro Finance Institutions which were aggressively building their retail loan book may come under severe pressure if businesses across the board witness massive layoffs.

The transportation sector has been one of the first victims of COVID-19. India's overall energy demand fell by 11% in March 2020. There is a surge in demand for truck drivers in the transportation of essential goods. As an example, there's a 40% to 60% increase of products being moved into grocery stores and warehouses in the US, since, COVID spread started. Since February, the web food orders have dropped by 20% whereas online grocery orders are overflowing.

Even after things normalize, the perception of risk related to crowd areas could lead to a shift in preferences towards personal travel modes. That is, people may avoid using conveyance modes to avoid crowds.

People can also avoid shared mobility modes like auto-rickshaws, micro-transit vans, e-rickshaws, etc. Many players within the transportation sector are adapting to those changing demands. As an example, American Airlines, and a few of its peers have converted many of the passenger flights to hold goods. Indian Railways have simultaneously canceled passenger trains and ramped up parcel services, and other freight services for essential commodities. At present, the industry employs over 22 million people in India.

Considering the main contribution of transportation and logistics in the economic process 14% (nearly) of the GDP (Gross Domestic Product) is spent on the transport and logistics industry in India as compared to eight -10%.

Indian Scenario –Transport and & LogisticsOGISTICS.

In the year 2017-18, the logistics Industry profits account for US$ 160 Billion, and it's expected to succeed in US$ 215 Billion by the year 2020. The Indian government has announced that it's performing at the policy to develop the new logistics plan in India. The aim is to develop the foremost economical thanks to transport goods by 2035.

The Indian industry deploys quite 8 million drivers and 12 million helpers. As a baseline, 30 million people are directly employed by the industry, and quite 150 million people depend upon it for his or her bread and butter.

The findings by the tech-based ecosystem with a fleet of 4 lakh trucks reveal that on a scale of 1 to five, 5 being the very best, Covid-19 has impacted the lives of the fleet owner to the extent of 4.115. The impact has been so severe that 62.50% of fleet owners preferred to prevent all work for the security of their drivers or thanks to less demand within the market, notes the platform’s survey.

Jobs lost due to COVID-19:

52% of firms except for job loss thanks to COVID-19 Majority of the CEOs surveyed see revenues of firms falling by around 10% within the previous and current quarters. During this lockdown, a majority of the businesses engaging in the production of essential products and provide ancillary goods face operational constraints. On the roles front, about 52 percent of the businesses surveyed foresee job losses, in their respective sectors. While the proportion of jobs that are expected to be cut is quite staggered, 47 percent expect but 15 percent job loss, and 32 percent of the businesses expect to shed 15-30 percent of jobs once the lockdown ends.

Post COVID-19 Scenario:

A decades-long specialize in supply chain optimization to attenuate costs, reduce inventories, and approach asset utilization has removed buffers and adaptability to soak up disruptions and COVID-19 illustrates that a lot of companies aren't fully conscious of the vulnerability of their supply chains relationships to global shocks. Fortunately, new supply chain technologies are emerging that dramatically improve visibility across the end-to-end supply chain, and support the company's ability to resist such shocks. The normal linear supply chain model is transforming into digital supply networks (DSNs), where functional silos are weakened and organizations become connected to their complete supply network to enable end-to-end visibility, collaboration, agility, and optimization.

Impact of COVID-19 on the Indian telecom sector

Telecom businesses are one of the top best-evaluated ventures in the market. With the developing time of digitalization, the industry has doubled its pace in the present pandemic crisis. This sector contributes to 6.5 percent of total GDP and has given employment to 4 million people in the year 2019-2020. Though there is a net fall in subscribers due to pandemic total subscriptions were 1.19 billion as of 30 September 2019. However, it should be noted that teledensity is 88.56 percent and FDI equity inflows are 8.13 percent.

Indian Telecommunication Industry before COVID-19:

Before the pandemic, media transmission businesses offered different types of assistance all over the world. The media communications industry has changed nearly everything, attributable to the reality of client needs and serious scenes moving in manners that a couple of businesses could have anticipated. Besides, before the flare-up, the Telco business was driving at its undeniable speed, and now also amid the pandemic, we have seen consumers getting attracted to data, more than 50% of the focus is shifted on data. The agenda of the telecom industry in India is concentrating on customer experience management.

Impact of COVID-19 on Indian Telecomm Industry:

As we are all aware the telecom industry is in service and handset business so we need to look at both perspective one by one:-

Services perspective:

Telecom is one of the most fundamental administrations and areas at the hour of the worldwide pandemic. It has been a key empowering influence in helping governments and organizations in timely communication, tracking, and helping actualize telecommute. With expanded flexibility of telecommuting as a feasible option for a few organizations, telecom organizations will have a rigging front end bundles, administration, and client procurement funnel to fulfill the need. This open door will make another arrangement of the working model, content utilization, and helped trade where telecom organizations can assume a vital job. Telco’s need to reinforce and turn out business progression plans and alternate courses of action towards isolating any of its significant call places, Network Operating Centres, and so forth including improving security conventions and VPN availability to encourage telecommuting.

Handset and OEM perspective:

The disrupted global supply chain is going to impact handset manufacturers and leading smartphone manufacturers are closing down their handset factories in various parts of the countries.

Financial Impacts:

As the world continues to cope with the effects of COVID-19, the Telecomm and tech sector has undoubtedly come to the forefront as the golden child of the Indian economy. While Telco has historically been less affected by recessions, some Telco’s may face issues with cash flow in the long term, similar to other industries. Investment in core data infrastructure and telecoms are increasingly attractive to investors and start-ups, they might be looking to a broader group of financial investors for next phase development. Many companies are looking at long term investments in their networks, and in some cases, pulling forward investment in 5G because of its increased reliability and speeds.

Opportunity:

The expanded broadband utilization at home has brought about pressure on the system and demand over above 10 percent. The telcos are likewise mentioning OTT platforms to ease network stress by decreasing video quality. Web broadband availability to confront tremendous pressure because of dependence on telecommuting. However, the telcos are bracing for a sharp drop in subscriber increments yet the interest for data transfer capacity is relied upon to go up from existing clients. Likewise, coordinated effort advances alongside telecom advances will have a chance to make new products and service offerings. An enormous center is the need of great importance for SMB and MSME customers who will investigate these choices to develop business. High Definition traffic which has been downgraded by Netflix/ Google and others will come back and consume capacity since connectivity becomes the lifeline of people. Work from home will continue to become ‘a new way of working’ thereafter. The government of India is taking informed action/ decisions and evaluating their decision based on Data analytics. AI will further play a greater role in inaccurate predictions.

Recommendations:

  • Relaxation of tax and compliances related norms similar to those relating to work from home can be initiated and submission of the annual report can be postponed amid crisis.
  • The Telecom sector can provide financial aid for companies to expand network rollouts.
  • Support for end customer can be increased by leveraging advanced technologies including IoT, OMNI channels and Artificial intelligence to gain a balance in the telecom sector
  • Telecom industries should develop infrastructure for comprehensive and robust cybersecurity and data storage capacities.

Future:

What is becoming more exciting, how we communicate and conduct business in the future will forever be transformed due to the crisis. Working from home will become more commonplace and communication platforms such as Zoom, Go-to-webinar or even Facebook watch will be used more frequently to replace face to face meetings. Telco networks will gain first-hand experience in dynamic network traffic management while businesses and their Telco partners will have a better understanding of the challenges of home working. Therefore, from a telecommunication perspective, this crisis has challenged the industry to invest in existing infrastructure and game-changing technology. Ultimately, telecom executives expressed confidence in their abilities to step up and meet the demand of a shut-in-India. Telcom and associated digital infrastructure is key to any nation’s progress. With 1.5 million kilometers of fiber laid and less than a fourth of the cell towers connected on fiber, there is a long way to go to ‘fiberize’ the backhaul infrastructure. Currently, most of the network connectivity in India is microwave-based, which accounts for about 75-80 percent of cell sites. For the network to be robust and available with low latency in the future, the need for 100 percent fiberisation has been felt the most at this critical stage.

Impact of COVID-19 on the Indian IT sector

Information Technology sector in India is an industry which is a key part of the country's economy. This sector includes two major components which are IT services and BPO (Business Process Outsourcing), IT services are mostly responsible for software development, software management, online services, cloud services, etc.

The IT Industry contributes as much as 8% of GDP for India, the industry has generated US$ 178 billion in revenue, the majority of revenue was generated in exports. The IT industry in India employs 4.1 million people as of FY19.

Not just well-established IT companies, but there is a huge spike in software startups as young entrepreneurs are focusing on building platforms and products for global markets. This has led to the creation of more than 7000 tech startups in India, from which 18 are the unicorns (startups valued more than USD 1 billion).

The outbreak of COVID-19 in China during December has reached its peak by infecting more than 2.5 million people, spreading through more than 200 countries.

India's IT sector is expected to post either flat or negative growth in 2020 due to the impact of COVID-19 globally, the most affected countries are the major IT service importer, including European countries & the USA which imports more than 50% of its IT services from India.

The Former CFO of IT giant, Infosys Ltd, V Balakrishnan said, "Look at the economic activity (globally). Worse than what we have seen in 2008 (global financial crisis).

IT companies have a task in front of them, to decide how they can add value for both parties. Clients from every industry such as banking, financial institution, transportation, aviation are going through a tough period, & budget will be the biggest issue they might face this year. IT companies may have to trim their workforce to cut the cost of service which can be done based on skills & competencies, productivity, cost & compliance, etc.

According to ISF (India Staffing Federation), the apex body of the domestic Flexi (contractual) staffing industry, the IT sector tops Flexi staff adoption with around 12 out of 100 employees being contractual. The hiring of Flexi staff is based on requirements for the projects, and clients may hire more Flexi staff as the requirements are uncertain, and payment can be in the form of performance-based, instead of fixed pay.

The tourism industry is completely down due to lockdown, most IT companies have clients from the tourism industry for whom they make they make the software solutions, IT companies like this will have the most impact.

Traveling restrictions will also impact the movement of IT professionals from India, this will affect the ongoing technological projects of Indian IT companies at offshore locations.

All the above mention problems may last for approximately 3 to 6 months, which will affect the timelines of project completion. Even though the IT companies are allowing work from home, the output remains questionable.

Meanwhile, some technology startups are stepping up to fight against the COVID-19. For example, Mumbai based startup Haptik Technologies, in collaboration with India's Ministry of Health, has launched a WhatsApp chatbot to create awareness about the COVID-19 and stop the false information spread across the platform.

Another example is an Artificial Intelligence startup Leena.ai is working with MNCs to provide a better employee experience, with automated shift planning and workforce management.

As of now, IT companies are finding their way to provide service to their clients, and we are still not sure when this pandemic will be under control. Once everything is under control, IT companies will come up with solutions on how they can be more flexible if there is a crisis so that they can benefit all the parties involved.

 

Key Pointers:

  • The Indian IT industry is the US $178 Billion and the growth of which is slated at 6.1% year on year. But due to the Covid-19 impact, it is expected that there will be a growth of 3-5% in the current financial year according to rating agency IRCA. It contributes to 8% of India’s GDP.
  • The market size of the IT industry across the country in:
  • Exports: $130 billion as of 2018
  • Domestic industry: $42 billion.
  • The export industry is expected to grow at 7-9 percent year-on-year to US $135-137 billion in FY19. The overall industry is expected to grow to USD $350-360 billion by 2025.
  • The issues faced by the Indian IT service industry include travel restrictions to developed countries, work from home, and closure of offices which impacts the moving of labor.
  • New projects to be delayed by a period of 3 to 6 months while existing projects already in the pipeline might also get delayed.
  • The credit profile of the Indian IT industry is expected to remain stable.
  • The quarter from January to March is expected to be a weak owing to lockdown measures being taken.
  • The companies have restrained to quantify the potential impact of the COVID-19 breakout on the financials.
  • The key verticals like oil and gas, BFSI, Retail are going to suffer as the capacity of clients comes down and so is the use of the software with BFSI contributing 30-35% of the total revenues of the country.
  • The recovery is forecasted during the second half of the year by ICRA, however, the extent of the virus and its attack remain uncertain. So estimating the losses at this particular stage is not possible.

Impact of COVID-19 on the Indian food and beverages sector

This sector contributes to the GDP and employment of 16.5 percent of GVA and 43 percent of employment according to data (2019-2020).

Food and grocery distribution is a change to the e-marketing In the domestic trade. Dry food groceries, agrochemicals fresh product, dairy, perishable, and spices. All of the sales are a hike due to panic buying.

  • The current and potential impact on the sector.

The price difference of key raw material due to the consumer supplies of cereals, pulses, fruit, veritable

And dairy products secured ad they part of the essential list of the government. Interstate food movements are erratic and many impacts on the price of daily essential goods.

The production is about down of the many bakery and ice cream product. But many of the food processing does not impact. The government needs to assure the prioritization of food categories under the essential list.

The cash flow of constraints of food delivery, online grocery based food delivery a platform that has and marketing of Rabi season commodities will decide the future price.

  • Impact of the Labor force:

Interstate movement of labor needs to be allowed for both primary agriculture and food processing sectors. Both primary agriculture and food processing sector.

A seasonal industry like mango, seafood, etc. Need support on labor availability. While the. Ministry of state and District official, and clear briefings to police departments is missing.

  • Due to the restriction impact of the company

The impact is on the food processing no impact expect of domestic poultry industry and export items like tea, rice, meat, spice, seafood, Due to the demand constructed.

Food categories like tea, meat spices, are heavily impacted due to both decreases in demand And domestic supply chain issue.

  • Impact of food retail:

Several state government has already allowed free movement of fruits, vegetables, milk, etc. Due to fake propaganda, poultry company is heavily impacted. Fresh meat, seafood has an erratic supply chain as there is no clarity of the state government on retail shops. Brick and mortar grocery retail chains and shops are operating normally but the shortage of the staff is impacting.

Impact of COVID-19 on the government sector

Government and public service organizations primary responsibility is protecting their people and providing the services which can enhance their daily life. Whenever there is a crisis, a natural disaster or critical situation governments are the central responders and decision-makers.

During December 2019 there was a sudden increase in pneumonia-like disease in Wuhan, China. According to “South morning China post” the first similar case was found on 17 November, that's more than a month earlier doctors noted similar cases in Wuhan, China. At the end of December, the scientist suspected that virus stemmed from animals sold at the wet market (Fresh meat market) at Wuhan. The scientist also realized that the virus could jump from one species to another when they found out one infected person during the initial phase had no connection to the wet market.

On 31st December 2019, the WHO (World Health Organization) China office heard the first report of the virus, their precautionary measures were not enough to control the situation as other countries started to show the similar cases, on March 11 the WHO officially declared the COVID-19 outbreak as a pandemic. So far (as on 20 April 2020) there are 24,16,135 cases and 1,65,939 deaths worldwide.

As COVID-19 has impacted more than 200 countries, government officials are on their toes to fight this battle against an invisible enemy. The best possible way to stop the spread is to lockdown the cities which are impacted the most, closing down all the non-essential services and allowing people to leave their house to buy essentials such as groceries.

The global economy was undergoing a lot of turbulence in 2019, in the following table, we can look at the GDP growth rate over the years for the top 10 countries.

Particularly India wasn't doing very well as there was a sharp decline in overall demand & consumption. There was a 79.5% drop in the value of new projects announced during April to June 2019, this was the highest decline since 2004.

Germany is Europe’s largest economy, on the global scale, it is the 4th largest economy in terms of nominal GDP, with a $4 Trillion GDP. Germany's economic growth was falling for 2 consecutive years from 1.5% in 2018 to 0.6% in 2019 was the worst annual growth rate since 2013.

Let's look at the impact of COVID-19 on the industries. China holds the title of the manufacturing hub, according to the United Nations Statistics Division, China accounted for 28% of global manufacturing output in 2018. Too much reliance on China has disrupted the global supply chain. As the manufacturing accounts for nearly 16% of the global GDP in 2019 some companies are looking to diversify their manufacturing base out of China as they learned the valuable lesson that depending on one country is not a viable option.

Japan's government has earmarked a $2.2 billion economic stimulus package to shift manufacturing outside China as the factories in China were closed due to COVID-19 the imports to Japan were slumped down by half. The high valued products are to be manufactured in Japan, and the production of other goods to be diversified across Southeast Asia.

After the outbreak of COVID-19, the global FDI inflow has witnessed a sharp decline. As per the estimation by the United Nations Conference on Trade and Development (UNCTAD), the COVID-19 outbreak could cause global FDI to shrink 5%-15%. The negative effects on FDI investment are expected to be high in energy, automotive and airline industries, as the manufacturers of the automobile, chemical, electronics, and aircraft are facing concerns regarding the availability of raw material.

The major automakers such as Nissan, Hyundai, GM, Ford, Honda suspends production across the world.

The biggest possible problem ahead is unemployment, according to the International Labour Organization (ILO) Director-General Guy Ryder even before COVID-19 spread worldwide, the unemployment rate stood at around 190 million. With the added shock of the virus, it was obvious that we will face a sharp decline in the employment rate. As of now, workers in 4 sectors experienced the most “drastic” effects of the disease and falling production are: food and accommodation, retail and wholesale; business services and administration; and manufacturing. Together they add up to 37.5% of global employment.

The United Nations, in its estimates for job loss, said that global unemployment could rise by 25 million. This number does not include the unemployment rate for the unorganized sector. It underscored that around two billion people work informally, most of them in emerging and developing countries, and that “tens of millions” of informal workers have already been affected by COVID-19.

Highlighting the impacts already being felt in India, ILO pointed out that with its share of almost 90% of people working in the informal economy, about 400 million workers in the vulnerable sector now face falling greater impoverishment.

Another challenge ahead for the government is feeding their people, while most countries can sustain the impact for a longer period, some countries are at most risk.