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Coronavirus: Covid disrupts China in December 2022; Negative impact on India and the World a big concern
Coronavirus, the 'Black Swan' of Global Economy has swallowed millions of human life. As the world was getting ready for yearend celebrations to usher in New Year 2023, news coming from China has put the entire world on high alert. Given the importance of this GD Topic, MBAUniverse.com presents a complete update on COVID 19. In addition to GD Round, this topic is also appearing in personal interview round for IIMs and MBA Admission Interviews. So, get ready!
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China upsets the New Year Party of the World
In December 2022, China may already be recording over a million new COVID infections and at least 5,000 deaths every day, according to new estimates by an analytics company, as criticism mounted over Beijing’s lack of transparent data and its decision to change what it considers a Covid-19 death. The new estimates were provided by London-based Airfinity, which predicted cases to continue to rise in China with two likely peaks, one in mid-January 2023 and the second in early March 2023.
India is on a high alert too.
Rising Covid cases in China are mainly driven by the BF.7 strain of Omicron variant of coronavirus, which has been detected in India too. Numbers may be small but here is why the Indian Government is worried.
PM Modi cautions people
Amid a spurt in Covid cases in China and some other countries, Prime Minister Narendra Modi on Dec 22 cautioned people against complacency and urged them to wear masks in crowded places, while also directing officials to strengthen surveillance measures, especially at international airports. At a high-level meeting, Modi reiterated that 'Covid is not over yet' and advised states to audit Covid-specific facilities to ensure operational readiness of hospital infrastructure, including oxygen cylinders, PSA plants, ventilators and human resources. Prime Minister Modi urged everyone to follow Covid-appropriate behaviour, including wearing masks in crowded public places, at all times, especially in view of the upcoming festive season.
Industry cautious about supply chair disruptions, but confident
India industry is preparing to tackle the likelihood of a new Covid outbreak in the country, following the recent surge in cases in China, and do not expect too much disruption to business and economy. Indian industry say that chances of any lockdown are remote and companies have a perfect hybrid model in place for employees. Businesses like mobile, electronics, automobile, FMCG and others, which depend on Beijing for raw material, do not rule out problems in supply chain if the crisis continues for long in China. However, they said that there’s no immediate crisis as inventory position is comfortable for the next 4-6 weeks.
“Two years of Covid has taught us and the government how to handle situations in the event of outbreak of Covid. I don’t see a situation where there would be a lockdown and business would have to shut operations,” RC Bhargava, chairman, Maruti Suzuki India, said. Subhrakant Panda, the newly-appointed president of Federation of Indian Chambers of Commerce and Industry (Ficci), and managing director of Indian Metals & Ferro Alloys, said there is no need to panic yet but alertness is certainly called for, and that the Indian economy and corporates have the depth and resilience to withstand any short and sharp disruption to the global supply chain.
Covid 3rd Wave – A nightmare to forget
In the context of above developments in December 2022, it is important to remember the recent past. After the devastation caused by first wave in 2020 and the second wave in 2021 that claimed lakhs of lives across the country, Coronavirus cases with new virus Omicron and Deltacron have started rising sharply in the third wave which broke out in January 2022.
Covid 3rd Wave Registers 2.64 Lakh Cases in Single Day
At more than 15 percent rise in fresh Corona infections, India is now witnessing a massive spike of 2.64 lakh fresh Omicron and Deltacron cases in a single day in January 2022.
Covid 3rd Wave in India Latest Update
Measures Taken to Control the 3rd Covid Wave
Covid Third Wave Vs Second Wave
Second Wave was devastating
After the first Covid-19 wave in 2020, the Covid cases in second wave rose sharply in April and May 2021.While Government and Industry thought that they had gained control of the situation by January 2021, the second wave found us wanting for basic necessities such as oxygen and medical supplies. The second wave was on its way out with daily cases coming down from the peak of 4 lakh cases in April 2021, but we had lost almost 4.0 lakh lives to COVID-19. With the hope that the situation would improve in coming months, a SBI report predicted third wave also which has arrived now.
Lower GDP Growth
In the wake of Second Wave of Covid 19, many economists and ratings agencies have lowered their FY22 GDP forecast for India in just a matter of months. While India’s March quarter (Q4FY21) GDP growth improved, economists believe that the gains have been eroded by the second wave of the pandemic. In June, the State Bank of India (SBI) slashed the country FY22 growth forecast to 7.9 per cent from the earlier 10.4 per cent.
Rise in Unemployment hits Poor Households
Rising unemployment has emerged as the biggest economic concern during the second Covid-19 wave as it has mostly affected the poorer sections of society. Data suggests that the pace of employment increased sharply in May as smaller firms cut jobs at the fast pace. Think tank Centre for Monitoring Indian Economy had confirmed that one crore Indians have lost jobs during the second wave and the numbers are still rising.
Weak Consumer Demand Hits Industry
Lack of demand and poor consumer sentiments during the second wave are factors that will significantly make India’s economic recovery harder. Consumers are not in a mood to spend freely after second wave, given the health and financial emergencies that shocked the households. The combination of slow demand growth and lack of consumer confidence could significantly derail the economy as people are likely to remain hesitant for a longer period before they start spending on discretionary items.
Loan Defaults on Rise
This negative impact is evident in the official data on rising loan defaults and cheque bounces. All Banks have reported a rise in loan defaults and cheque bounces during the second wave. It is a clear sign that middle class Indians are struggling to manage debts and liabilities. Cheque bounces rate for loan repayments have doubled to over 20 per cent from the year-ago period while credit card defaults rose to 18 per cent, says a Reuters report. Many banks have indicated that retail loan defaults are likely to rise in the coming months. HDFC Bank’s CEO Sashidhar Jagdishan recently stated during an investor call that the bank may not have a “grip of what is happening for the first time in so many years.”
Rural India Hit Hard
The second wave has seen stricter and longer lockdowns in the rural parts of the country too. Most APMC Mandis were closed for operations at the peak of Second Wave. Due to the closure of Mandis, vegetable vendors, and processing industries have also been hit. The average wage growth for the agriculture sector for the period of November 2020 to March 2021 has reduced to 2.9 percent (2nd wave) from 8.5 percent in April to August 2020 (1st wave).
Government Takes Steps
Government of India has taken many steps to support the Indian economy and industry. Here are the key steps:
COVID-19 Vaccination in India
On 16 January 2021 India started its national vaccination programme against the COVID-19 pandemic. The drive initially prioritises healthcare and frontline workers, and then those over the age of 60, and then those over the age of 45 and suffering from certain comorbidities.
A new policy for Covid-19 vaccination in India come into effect on June 21. Prime Minister Narendra Modi had said India will shift to centralised procurement of vaccines, after several states faced difficulties in procuring and managing the funding of vaccines. Centre will directly procure 75 per cent of the doses manufactured by vaccine companies, and distribute this among the states, to be administered for free. Private hospitals will have exclusive access to the remaining 25 per cent.
COVID 19 Impact on MBA Education
Global higher education including MBA education is also affected as even the top MBA colleges of the world like Harvard, Chicago Booth, Wharton, Stanford, Kellogg, MIT Sloan and hundreds of others have decided to move to online teaching instead of class room teaching. Besides, the B-schools have extended their spring break, have stopped international exchange programs, have cancelled the events like convocation, have restricted international travel and have taken other measures to restrict the movement of students and faculty. In India also, B-schools have postponed their Convocations, delayed admission process and session commencements, and are conducting awareness programs for Corona virus.
Leading institutions such as IIM-Ahmedabad, IIM-Kozhikode, IIM-Indore, IIM-Trichy, Bhavan’s SP Jain Institute of Management & Research (SPJIMR), IIT-Bombay, IIT-Kanpur have introduced measures including postponing of events and large gatherings, imposing travel restrictions and holding extensive awareness generation sessions on campus about the outbreak. In 2021, things were coming back to normal at B-schools, but the second wave has put spanner in the works. MBA Admissions and Placements have been impacted negatively. However, Universities and B-schools are expected to reap long-term benefit as they have embraced online teaching, and many other digital technologies in domains like admissions and student management, which will make them more competitive.
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