COVID19 Economic Impact Study Report from Ground Zero Executive Summary LFC presents to you, the economic impact of COVID-19 from The States will start easing off lockdown, but it will take Ground Zero. up to 4-5 months for India, to come out of Lock down completely In a decade of our implementation consulting experience, we have reached almost 65% of India’s tehsils. Among the top 10 states, which contribute to 75% of the To truly understand this unprecedented pandemic situation, we national GDP, 5 states, which are contributing to 31% of decided to go back and touch base with all stakeholders in the the economy, shall come out of lockdown within next 2-3 past decade and take feedback on the local conditions: months infections, the effectiveness of containment efforts, reach of government interventions and actual scenario on the ground. However other 5 states including Maharashtra, which contribute to 44% of the GDP, will be able to come out of We connected with hundreds of stakeholders: CEOs, small lockdown in 4-5 months time business owners, farmers, large distributors, retailers, truck owners and salaried employees. Based on expected post lockdown demand and All those efforts will be meaningful if it helps you in forming a effectiveness of Govt intervention - sectors contributing to clear view of the economic situation, once you finish reading the 36% of the GDP might see a quick and early revival and report. sectors contributing to 64% of GDP might experience a slow revival Thank you for your time. Ankur Kumar Indian towns will be fully back to normal by end Editor – COVID-19 Economic Impact Study Q3-FY21 Operating Partner, LFC Consulting Practice LLP Indian economy will be fully back to normal by Q2-FY22 Disclaimer: If vaccines not invented Executive Summary: States Rate of infections; Effectiveness of lockdown; Pace of testing; Rigor of containment zones management are keys to faster opening up States at a Glance Based on virus Spread, confirmed cases per million MH - Rate of testing could be significantly higher. and tests done per million we have categorized each state DL - Appropriate reaction and 3.7% into 9 categories results thereon observed. Higher rate of testing & +Ve cases. 4.85% 7.7% GJ - Lower rate of testing observed. Higher mortality due to presence of L-strain of the virus 8.1% 6.3% WB - Low rate of testing observed, given the population density. Challenges seen on the 13.81% medical infra readiness. 4.75% UP - Very low rate of testing observed. While locations like 7.7%4.6% Agra have been cleared, there are questions on testing ratio. KL - Amongst the first to face the 8.9% 4.1% trauma, at high intensity. Effective implementation of Social distancing & Lockdown have flattened the curve. TN- 3rd highest rate of testing noted. Containment Zones identified correctly for action. • The study focused on • In alignment with GoI strategy, after • RED States: Lockdown measures in KA&AP - AP has the 2nd highest rate of testing. Both KA & AP understanding the impact of universal lockdown – focused hotspots were not effective. Still need to have effectively controlled the COVID19 in these states containments shall be stage II for enforce larger lockdown measures. More spread. Hundreds contacted in these managing the pandemic time to open up • RJ - Rapid testing and strict states, across all districts, to • Testing capabilities/ preparedness • GREEN States: Effective lockdown results. lockdown has helped Rajasthan understand the effectiveness of become important for containment-based Focus should be more on testing &target control the spread at an early stage. lockdown control containment zones 1-on-1 Executive Summary: Sectors Expected demand for sectors post open-up and effectiveness of government interventions for the sector are keys for quick recovery % indicate sectoral contribution to GDP TRADE & REPAIRS REAL ESTATE FINANCIAL SERVICES RAIL & ROAD The demand for this The demand of the Given the emphasis on Slowdown in sector is expected to be sector might fall, banking under manufacturing and robust; but lack of because of lack of Atmanirbhar Bharat, social distancing norms working capital disposable income; Financial services might slow down the 11% because of lockdown 15% Slow recovery 6% might see a quick 7% recovery might slow the expected recovery; however NPA recovery down may rise HOTEL RESTAURANTS COMM BROADCASTING FOOD BEVERAGES TEXTILES Because of social Given WFH and demand Because of demand May face shortage of distancing and low for OTT the sector is quick bounce back is labour; low income travelling slow bound to see strong expected might lead to tepid recovery is expected recovery demand; slow recovery 1% 2% 1% 2% expected MINING METAL MACHINERY CONSTRUCTION OTHER MFG High Govt intervention Given the low utilization The Demand may go The recovery is and major reforms may in manufacturing the down; Lack of Labour expected to be slower lead to quick recovery demand of this sector The sector might some as it’s because of will be tepid recovery for Public overall demand revival 3% 6% Slower recovery 7% sector construction, but 7% expected largely the recovery will be slow CROPS PRODUCTION LIVESTOCK FORESTRY AQUACULTURE Harvesting of rabi The activities at optimal The Demand of this The Demand of this crops suffered level are continuing expected to slowdown expected to slowdown Govt support for MSP during lockdown In absence of Govt In absence of Govt and new sowing season Because of demand Support , slower Support. Slower 11% should help the quick 5% quick revival expected 1% recovery expected 1% recovery expected revival Sectoral contribution to GDP and GSDP, government interventions and on-ground sentiments – a combination of all have been factored in our analysis for which states, for economy to come back to pre-COVID levels, it would take till Q2-FY22 MAHARASHTRA IMPACT ON ECONOMY • Top 3 districts have come to a total halt. COVID impact on the districts of Pune and Thane has hampered the manufacturing of the estate; ECONOMIC OUTLOOK • Trade and Services based economy of Mumbai is also disrupted due to social • Maharashtra is the largest state of India, contributing to almost 14% of distancing; national GDP. It also accounts for 36% COVID-19 cases in India. • Agriculture as a whole has taken a beating with farmers struggling with • Mumbai, Thane and Pune districts, amongst the worst affected, inefficient logistics, harvest being sold way below MSP and coping with a labour contribute to almost 45% of the state GDP shortage. • Services contribute to 54% of GSDP • Real estate transactions, trade , repair, hospitality, transportation SPREAD OF CORONA VIRUS account to 60% of services activities; Non-essentials in these have been impacted heavily due to lockdown. • The pandemic has seen a rapid spread in Maharashtra accounting for 36% • Covid-19 cases in India. • Manufacturing second major contributor 27% of GSDP Has seen drastic loss in revenue as manufacturing of non-essentials has • The state has seen an average 12% daily case growth in the month of April, • tapering to 6% daily case growth in the 3rd week of May come to a halt; Major manufacturing hubs Mumbai, Pune(Pimpri Chinchwad), Thane • Government measures, especially in Mumbai-Thane-Pune, don’t seem to • be proving as effective, as the region alone contributes to 85% COVID-19 operations have halted during lockdown. cases in the state. • Agriculture contributing to 18% of GSDP Farmers suffering huge losses owing to inefficient logistics and harvest • Lesser number of tests done compared to the number of people tested • +Ve - indicates lack of effectiveness in contact tracing. being sold 5-15% below MSP; • Lack of auctions , suspension of vegetable markets leading to low prices to farmers; • Grape, Pomegranate , Mango harvest expected to suffer 40% loss. POLICY INTERVENTIONS, TILL NOW OVERALL RECOVERY • The large contributing sectors such as Trade, Services & Real estate • The number of cases in Maharashtra is expected peak in the month of July and have not seen any significant intervention from the government to from there on it should take further 2 months to emerge completely out of the expedite the recovery process. lockdown. • Agriculture which contributes to 18% of the economy has seen a higher • However, the demand recovery and recovery of the economy as such should be degree of Govt. intervention and hence expected to revive at a faster expected only in the second quarter of FY22. pace TAMILNADU IMPACT ON ECONOMY • Services contributes 54.94% of GSDP • Realty projects are now delayed in the Chennai Metropolitan areas as construction workers had to suspend works and prospective buyers put a hold on investments ECONOMIC OUTLOOK • The lack of inbound tourists from several countries has led to a sharp fall • Tamilnadu is the second largest state from the GDP perspective in hotel room occupancy, to a mere 30% • It’s economy is balanced in terms of district-wise contribution to GDP • Transport corporations in the state lose Rs 1,200 crore during lockdown. • Manufacturing second major contributor - 31.28% of GSDP • With total disruption in workflow and production schedule, the textile and clothing industry is facing its worst-ever crisis. Majority of workers are migrant labourers who have now started returning to their native SPREAD OF CORONA VIRUS places. Tamilnadu accounts for 12% Covid-19 cases in India • • Manufacturing activity in Tamilnadu, especially in and around Chennai, • The state has seen an average 12% daily case growth in the month of has come to halt with large auto and electronics companies deciding to April, tapering to 5% daily case growth in the 4th week of May shut their plants, as part of the effort to contain the spread of COVID-19 Most of the cases are attributed to Koyembed Market; • • Agriculture contributes 13.78% of GSDP Tamilnadu has the highest total Covid-19 testing record.