Stock market’s reaction to the Covid-19 crisis: The SARS CoV2 virus epidemic, also known as the COVID19 pandemic, has influenced the social, economic, political, and cultural life of people worldwide.
The sudden advent of the pandemic has exposed countries’ legislative readiness, or lack thereof, to reduce and contain the disease’s destructive impacts. In every epidemic or pandemic emergency, strong legislative actions are critical.
Under item six of the State List, states can pass laws relating to “health care, sanitation, hospitals, dispensaries, and animal disease control.” Under items 26 and 29 of the Concurrent List, the Union and states can enact legislation relating to the health profession and preventing infectious or contagious illnesses or pests affecting humans, animals, or plants from spreading from one state to another.
This has affected the Indian stock market as well. Let’s find out stock market’s reaction to the Covid-19 crisis, Keep Reading!
What Statistics Say
Stock market’s reaction to the Covid-19 crisis during the lockdown, an estimated 140 million individuals lost their jobs, and many others saw their incomes reduced.
In a study conducted by the ‘Edelman Trust Barometer,’ 67 percent of the 13,200+ persons surveyed agreed that “the government’s primary priority should be preserving as many lives as possible, even if it means the economy would recover more slowly”; that is, life should take precedence over livelihood.
The poll found a 64 to 36 percent split between India, with 64 percent agreeing that preserving as many lives as possible was a priority and 36 percent agreeing that protecting jobs and restarting the economy was.
Economic Situation
According to a FICCI poll conducted in March, up to 53% of firms in India have indicated a particular degree of effect of coronavirus shutdowns on operations. As per the ‘Center for Monitoring Indian Economy,’ the jobless rate has grown about 19 percent in a month, hitting 26 percent across India on April 24.
During the lockdown, around 140,000,000 (140 million) Indians lost their jobs. Compared to the previous year, more than 45 percent of households in the United States reported a decrease in income. Hotels and airlines, for example, have lowered pay and fired off workers.
From March to April, revenue for transportation providers like Ola Cabs fell by roughly 95 percent, resulting in 1400 layoffs. For March and April alone, the tourist sector is expected to lose Rs 15,000 crore (US$2.0 billion).
According to the CII, ASSOCHAM, and FAITH, a large portion of the tourist workers in the nation is unemployed. The live events sector lost around 3,000 crores (US$390 million). As funding has dried up, many fledgling firms have been harmed.
Stock market’s reaction to the Covid-19 crisis government income has been badly harmed due to lower tax collection. As a response, the government has been looking for methods to cut its own expenditures.
Union Minister Nitin Gadkari stated on May 10, 2020, that certain states may be unable to pay wages shortly. RBI Governor Raghuram Rajan said that the coronavirus outbreak in India might be the “biggest emergency since Independence,”.
While the former Chief Economic Advisor to the Government of India stated in April that India should prepare for negative growth in FY21.
COVID-19 has had a worldwide impact. India, like other countries, has implemented the safest kind of lockdown to avoid a pandemic. Increased inflation is one of the most serious consequences of the shutdown.
Covid-19 has had a variety of effects on the economy. Still, the most visible is the impact of inflation, which has impacted everyone. Even throughout the epidemic, India’s inflation rate did not go below 6%.
Inflation has always been one of the most contentious economic issues. It is the gradual escalation in the price of everyday things over time. This article aims to examine the impact of inflation on the Indian economy during COVID-19.
The study examines the methodologies for measuring inflation and the variables that contributed to India’s current high inflation rate during COVID-19.
Decreased corporate income taxes, goods and services taxes, and personal income taxes will all see fewer revenue as a result of lower company profitability, lower spending, and more unemployment.
The drop in international commerce, travel, and domestic spending would reduce revenue from consumption taxes, which are a key source of revenue for most low- and middle-income nations.
India has been devastated by the pandemic, particularly during the virus’s second wave in the spring of 2021. Although the significant reduction in GDP is the biggest in the country’s history, the economic harm suffered by the poorest households may still be underestimated.
The extent and duration of this catastrophe are unknown to the rest of the world, and it is the biggest economic disaster since the Great Depression.
In Closing
The fast-spreading COVID-19 virus has wreaked havoc on the world’s thriving economy in unexpected and unforeseeable ways. COVID-19 inflicted a profound wound on India, which is still healing.
Looking forward to seeing how the Indian economy develops so that it can catch up to the rest of the world and rejoin the race. Hope you have a clearer picture of Indian stock market‘s reaction to the Covid-19 crisis. Get more updates and keep yourself updated with the Fingrad blog section.
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