Mar 21, 2020
A micro virus has twisted wealth and rusted investor confidence in India. It has disrupted and slowed-down the industry, the market and the consumers. No matter what Anurag Thakur believes, the future looks bleak. Economists think that the biggest growth risk would be from preventive measures such as mass quarantine or movement restrictions and the related pullback in consumer spending, investment, and services activity.
India’s food export market is hit badly, though the exporters are expecting the impact to come around in a lead time of three months. They anticipate a hit of around $1 billion due to disruption in trade because of closed borders and order cancellations.
India’s dairy, meat and cereal exports could also see a slump over the new few months, due to the outbreak. China is the world’s largest milk powder importer. India is the world’s largest exporter of skimmed milk powder (SMP). In FY 2018-19, India’s dairy exports were worth about Rs. 2,700 crore.
Other than dairy, India’s meat exports could also see a decline. India is the largest beef exporter in the world with 13.48 lakh tonnes of buffalo meat exports in FY 2017-18. International prices of ovine and bovine meat fell in February due to reduced imports by China, as per a report of Food and Agriculture Organization (FAO). “Maize prices retreated too, influenced by expectations of weaker demand from the feed sector due to overall deteriorating economic prospects,” FAO report said. India exported 10.51 lakh MT of maize in 2018-19, worth about Rs. 1,800 crore.
Tea exports are also likely to be adversely affected as Iran is a critical market for tea exporters. There is concern about demand for new season tea from the Persian Gulf nation due to coronavirus outbreak. There might be a decline in demand in the short term. China — the epicentre of COVID-19 — is also a major importer of Indian black tea. Imports of the beverage from the neighbouring country are also expected to be impacted.
While it is too early to assess the impact of COVID-19 pandemic on the Indian economy, there is little doubt that it is going to be significant. Some early indications are already available.