Trade and commerce is one of the important aspects to determine the development of a nation as it helps to enhance and build up a strong economy. But in quite a few months the world has witnessed a huge downfall in the economy as the ongoing pandemic had a great impact on trade and commerce worldwide. The ongoing pandemic (COVID-19) has caused a huge disruption in demand and supply, thereby affecting the trade and commerce badly. The Indian economy has seen a remarkable downfall in the recent times due to the ongoing pandemic. WTO has pointed out a downfall of 13-32% in global trade, marking this to be the highest in the modern era. It has also pointed that situation is so worse that it would be too early to predict the growth projections in the coming time. The preventive measures have has a great impact on few of the sectors like aviation, tourism, business, employment etc. The recent study of WTO reflects that India is among the 15 such countries who have badly been impacted by this pandemic. There is no any sector that has not seen the impact. Stats sows that the overall decline in trade and commerce has been 4.03% whereas individually, agriculture sector witnessed a decline of 3.36%, manufacturing industry with 3.98%, service sector 4.35%, domestic services 8.23%, which is the highest, whereas the trade tourist services witnessed a decline of 8.76% and the natural resources suffering the least with 0.84%.
The current situation has almost witnessed an impact in each and every sector. But there are some sectors that mostly determine the aspect of trade and business. Some of the hard hit sectors that have badly impacted trade and commerce can be analyzed as:
1. In order to maintain social distancing in various employment sector, India has recently witnessed a downfall of about 3% in employment rates. Also few of the sectors are working remotely that has impacted the working of various industries, thereby affecting the demand and supply of goods in such industries. These industries play an important role in trade and business and their closure at the present moment has badly hit the Indian economy.
2. The second problem entails a sharp drop in international tourism. This is captured via a 50% consumption tax on international tourism-related services, such as transport, accommodation, etc. This generates typically small revenue for the relevant countries that is rebated back to households with a lump sum. The export tax is applied to both outbound and inbound (tourist) services that include: accommodation, food and service activities; water, air and other transport; and recreational and other services. The effects of COVID-19 in the tourism, hospitality and recreation sectors have been unprecedented. In the accommodation and lodging sectors, quarterly revenues are down 75%. Travel agents saw a slowdown in bookings of 50% in March of 2020. Airlines worldwide are expected to lose $113 billion in revenues for 2020. In the peak of the outbreak, all the scheduled flights in India have been canceled. As of mid-March 2020, international travel has ground to a halt, with the World Travel and Tourism Council (WTTC) estimating that global travel would decline at least 25 percent in 2020.
Not only the decline but the recent Indian government advisory asked all such airlines as well as railways to make a refund of the booking that were initiated amidst lockdown period. With the further extension of lockdown, there is no certainty as to how much this sector is going to suffer. And all this has impacted the Indian economy, which now needs some sharp minds to work on it in order to figure out the make up policies in the coming time.
3. The 3rd aspect of the impact directly goes on to the foreign trade. US and EU are the biggest export market for the Indian companies but the ongoing pandemic leading to the lockdown has highly impacted the foreign trade. Stats clearly shows that even before this lockdown period, Indian trade i.e. the import and the export has already witnessed some downfall due to number of reason. Between April 2019-February 2020 for the period before the lockdown, India’s merchandise exports declined by 1.5% over the same period last year while imports declined by 7.3% to $436.03 billion. The downfall during this situation is expected to be more and would take some good years to revive the losses suffered at this point of time.
4. Not only internationally but domestically as well, the trade and commerce seems to be blocked at this moment. A demand switch by households who purchase fewer services requiring close human interaction, such as mass transport, domestic tourism, restaurants, and recreational activities, while redirecting demand towards consumption of goods and other services. Demand for the targeted services is assumed to drop by 15%. This results in a reallocation of household demand across sectors, while total expenditures are still driven by previous shocks and relative prices of goods in the consumption basket. It is difficult to estimate the impact of social distancing and overall decline of economic activity on those selected sectors, but anecdotal evidence suggests that it is likely to be significant. With social distancing measures and closures of nonessential businesses, the bookings through Open table network declined by 100% in the second half of March (data form the United States, the United Kingdom, and Germany). Depending on the length of the business closures, the annual impact could vary drastically. The decline of 15% at an annual level seems like a middle of the road estimate says the study conducted by World trade Organization.
Therefore after analyzing the core problems that has arisen in the current scenario due to the widespread pandemic, it would be difficult to say as to how much are these sectors going to suffer more. It would however be important to take some steps in order to minimize the impact of COVID-19 on the trade and business. Trade and business mostly and directly affect the economy of a nation. Moreover, for a country like India it becomes really important to trace all possible solutions to keep a hold over the situation.
There are several measures that have been taken by the government to ensure that the economy does not suffer the most. However, the unprecedented condition we are facing has already impacted a lot and we need to adopt some more measures to it.
1. It is known that IBC remains suspended for the time being, also the RBI has provided certain relaxations which is good effort considering the situation but the same can not work in a long run and we need to devise an alternative to it until we have a vaccine or the virus is eliminated.
2. A global crisis requires a global response and there is a need for global collaboration not just on health, but also on trade, finance and macroeconomic policies.
3. Trade and commerce is required to be enlisted as essential services as they are the backbone in determining the economy of a nation.
4. As India has responded to the demand of medicines by US and Brazil, so it reflects that trade and commerce is possible even during the current situation with minimal risk to life. Also this response to US and Brazil has established the reliability of the Indian Pharma industry and the government should look to work in this direction and become a major exporter of such medicines to other countries as well. This is somewhat help the economy.
5. WTO needs to come forward in order to strengthen the trade and commerce at the global platform.
Despite of several measures that have already been taken by the government the situation still remains not very good. The current restrictions and the increasing concern over safety has posed everyone in a situation from which recovery would still demand and take some time. There has been a setback on trade all across and mostly the local and small traders have faced a lot of difficulty due to this sudden outbreak of pandemic. Everyday has been a struggle for life and food. The time is really tough and this requires some more attention of the government so that their condition improves. With the unlock processes their situation is rolling back but it would still take some time.