Effect of COVID-19 on the Indian Economy and Supply Chain

At present time world is facing from the coronavirus disease known as Covid-19. The first case of the coronavirus was reported in the December, 2019 in the Wuhan city of China which is known as the major transportation hub of China. After the spread of Covid-19 many countries have shut down their sea ports and airports. They have banned the import and export activities. Also, China is the major distributor of the raw materials which affect the manufacturing activities across the globe due to lockdowns. India is the developing country due to the Covid-19 spread the cases reported in the India government has lockdown the country for 41 days which affected the manufacturing activities and majorly it affects the supply chains and economy of the country. In the present paper we have discussed the effect of Covid-19 on Indian economy and on supply chains in India. There are total of 18 critical barriers are found out which affected the supply chains in the India. It is expected that this study will helpful the researchers to develop the conceptual models to overcome from this issue.


Introduction
Manufacturing plays an important role in the development of nations by contributing to the GDPs [1]. Manufacturing industries are the major contributor in the global economy [2]. At present time industries across the world are focusing on the high value and high margin products [3]. Now the production of the low margin and high volume products have shifted towards the low economies [4]. The application of the just in time and lean philosophies had contributed towards the cost reductions in the industries. But still due to the Covid-19 issues around 35% of manufacturers have reported the disturbances in the manufacturing practices. At present there is huge demands of many products in which the face shields and pharmaceutical products are main.
The demand of these products has increased in last two months [5]. The manufacturing units in most of the countries have shut down due to Covid-19 spread and most of the countries are facing from the lack of the labour due to the fear of Covid-19 spread. The first case of  in India reported in January, 2020 and now Government of India has declared the lockdown in the country to minimize the spread of Covid-19 [6]. Supply chain across the nation is disrupted.
The Indian government has already held the high level meetings to set the new manufacturing strategies. Japan and other countries are also looking for the diversify the supply chains and manufacturing systems to new destinations. Indian government is now focusing on the try and establishing India as an alternative to the China for manufacturing for both the local and global market. Most of the countries have shifted their production out of China due to the disruption of the supply chain between major trading partners [7]. Supply chain is also disrupted in India at local level due to some barriers which are discussed in the present study. In the present paper we have discussed the effect of Covid-19 on Indian economy and on supply chains in India. There are total of 18 critical barriers are found out which affected the supply chains in the India. It is expected that this study will helpful the researchers to develop the conceptual models to overcome from this issue.

Impact of COVID 19 on Indian Economy
After the great depression of 1930 in which the global economy has faced the worst recession is now facing the global pandemic of corona virus that has laid the adverse effect on all the economic activates across the world. The sudden decline in economic activities due to the lockdown is unexpected in the history of India. The great economist Keynes has suggested the concept of trade business cycle after the great depression. The four stage of trade cycle is considered to measure the growth rate and real GDP. International Monetary Fund (IMF) has projected the GDP growth as 1.9% and this shows the worst growth performance of India after the liberalisation policy of 1991 in this fiscal year as the corona virus has disturbed the whole economy [8].
Instead after this the IMF in its latest edition of the World Economy Report has placed India being the fastest growing economy in 2020. The global economy is projected to contrast sharply by -3%percent in 2020 which is much worse than the financial crises in 2008-09. In India, the impact on real or predictive sectors of the economy is worse than that witnessed in 2008 crises.
The country will now face multiple challenges in terms of financial crises, health crises, collapse in commodity prices and much more [9]. The banking system has increased the surplus liquidity because of the demand-side shocks that arises due to uncertainties as well as lock down in the market. There is a huge impact on the financial shock that includes stock market crash, liquidity crises as it began to drain out from global market in banking system and various changes in monetary policies. The US dollar credit crunch has started bothering the world economy due to huge collapse of earnings, dollar denominated debts [10]. As the most of the companies that depends upon international trade will suffer severe pressure. The global economic production is on decline and expecting a huge recession in the entire economy. The global pandemic has hit the economy which questioned the target to make Indian economy of USD $5 Trillion with 7% of GDP by the year 2024. As per the World Bank latest assessment, India is expected to grow 1.5 percent to 2.8 percent as well as according to IMF, it has projected a GDP growth of 1.9 percent in 2020 and to achieve the object of USD $5 Trillion economy it is expected to grow at 9 percent

India's growth trajectory since 2011
Demand side shock: The huge uncertainty and fall in market has led to double whammy of business that disturb the entire chain of production and demand cycle. It includes the various facilities and services provided by the Indian government and private sectors such as Tourism, Hospitality and Aviation are the major sectors that are facing maximum loss in the present crises. Tourism that account for 9% of GDP may decline at least next 2-3 quarters [12]. Aviation that contributes around 2.4% of GDP has severely impacted and these sectors include employees around 42.7 million of people. Sectors such as auto, that contributes 10% of GDP and employee around 40 million of people, is declining continuously due to less of demand and due to which the marginal firms and other industries has forced to shut down [13]. Various sectors such as pharmaceuticals, automobiles, electronics and chemical products etc are facing a shortage of required component [14]. As china accounts for 27% of India's automotive part imports. India imports about 85% of active pharmaceuticals ingredients (API) from china and due to the factor there is a possibility of shortage in availability and thus prices may go on hike. Due to the lockdown and global pandemic the business is hampering with the production cycle that will further affect the investments [15]. There is about 55% of electronics are imported from china that has slid down to a percentage.

Impact on International Trade:
According to WTO, world trade is expected to fall by between 13% and 32% in 2020 due to COVID 19 pandemic that has disturbed normal economic activity. Share of Indian export in, in total world's export is 3.5% and share of Import in world's import is 3.1% (  The manufacturing units in China have already shut down and will be shut down for next few months. Supply lead time have also affected due to n-CoV it takes around 30 days for shipping from China to U.S or Europe [19]. It means if China has shut down their manufacturing units in January then shipments will arrive in February and there will be spike in the temporary closure of manufacturing units in the mid-March. For example Fiat Chrysler automobiles have already announced for temporary shut down their production in Serbia as the parts imported from China.
Similarly, Hyundai has also announced to suspend their assembly lines in the Korea due to the disruptions in the supply chain because of n-CoV. The effect of n-CoV has already visible to world as there is decrease in 40% of departures from the ports of China due to n-CoV outbreak which is showing that there is a major effect on the manufacturing worldwide. There are three impact areas which are majorly affected due to the n-CoV which are: 1. Workforce: To limit the impact of cornovirus government has already instructed their people to stay at home where in developing nations like India, government has already advised their employees to stay at home. Some of the industries are depends on other industries for goods in which supply chain has disrupted due to n-CoV. Now, the industries having very less workforce to meet the customer demands.
2. Products: The n-CoV has transformed the competitive landscape. Suppliers are at risk to lose their market value and share as clients are now seeing the other options when they are not receiving the good products or on time.
3. Costs: There has been increase in the costs of the products due to increase in the shipping charges of products and industries are now also meeting with their financial objectives. There is increase in some of the products due to the n-CoV effect as it disrupt the supply chains. There are multiple challenges for the industries at present such as: at the same time they have to work for the protection of their workers and also safeguard their operational viability. At present most of industries are working with mobilizing concept so that they can set up the crisis management mechanism for short term. Industries have to face the six main challenges for this: 1. There is need to create transparency on the multi-tier supply chain with the critical list of components. There is need to determine the origin and alternative sources of supply chain to tackle the current situation.
2. There is need for the estimation of current inventory which includes the spare parts and after sale stock which can be used as the bridge to keep the production processes running until the situation comes under control.
3. The demands of some products may increase or decrease in such type of situations. There should be proper demand planning according to industry experience. There is need to develop demand forecast strategies which defines the time horizon for the demand forecast which will help in the risk informed decision for the industries.
4. There is need to optimize the production and distribution capacity in the organization.
Optimization process begins by ensuring employee safety which includes the engaging and sourcing with the teams working on the crisis situation to communicate with the employees of the industries regarding infection risk concerns. There should be options for the home or remote location working.
5. There is need to identify and secure the logistic capacity. It helps to estimate the capacity and accelerate whenever possible also results in flexible transportation whenever required.
6. There is need to manage the cash and net work capital by running the stress tests which helps to understand when the supply chain of industry will start to cause the financial impact.

Barriers in Supply chain during COVID-19 in India:
Supply chains are always influenced by some barriers [20]. India is the developing country and Covid-19 has disrupted the supply chain of India. Global supply chains are also disrupted by the Covid-19. Many countries has banned on the import and export of many goods which affected the manufacturing firms across the globe. The barriers for the Indian supply chain caused by the Covid-19 are found out with the academia discussion and supply chain experts. There are total of 18 critical barriers were found out in the study which is discussed below: These barriers have the great influence on the Indian supply chain. Although these issues in the supply chain are very generalized which needs further study and prioritization of these barriers will help the industries to overcome from the supply chain issues due to the Covid-19. These barriers can be studied with the MCDMs techniques such as AHP, ANP, TOPSIS, DEMATEL, MAVT, MAUT, VIKOR, Fuzzy set theory based MCDMs and other model validation can be done by data analytics techniques such as: SEM, ANOVA, and ISM [21][22][23][24][25].

Conclusion:
In the present study the effect of Covid-19 on Indian economy and supply chain is studied. This study also reported about the Covid-19 effect on global manufacturing and supply chain. n-CoV has affected the manufacturing firms and their supply chain over the world. COVID-19 is affecting our supply chains and manufacturing operations daily. The peak of COVID-19 virus have already affected the supply chain and forced thousands of industries to throttle down or shut down their assembly lines temporarily in the U.S and Europe and now in the developing nations