Impact of COVID-19 in India-Pharma vs Aviation; Entertainment; Hospitality

13 Pages Posted: 1 Aug 2022

Date Written: May 10, 2022

Abstract

Change is the only constant. 25th march 2020- a red letter day in the world calendar of the 21st century. Industries witnessed the unprecedented. While each new day spelt doom for yet another industry, a handful of companies started rolling in the big bucks. Aviation, entertainment, hospitality, the industries that had remained prospered for more than half a century suddenly sank into the red. And, pharma companies like: Dr. Reddy, Bharat Biotech, Strides, Sun Pharma to name a few, emerged winners overnight.

India is still reeling under the effects of the 2020 lockdown. The corona virus pandemic has had a disruptive impact on the economy at a global level. However, it’s the once profitable industries like hospitality, entertainment, aviation to name a few, who have been victims to the greatest number of predicaments.

India, a third world country with an already limping economy had been further crippled by a 4-month long lockdown, and an ever-continuous shutdown. It was estimated India would be losing about 4.5 billion dollars daily for the first 21 days of lockdown. Under complete lockdown, less than a quarter of India’s 2.8 trillion economic movement was functional. Supply chains were subjected to tremendous stress because of the lockdown restrictions. Lack of guidelines delineating what is “essential” and what isn’t created a conundrum for those in the informal sectors. Farmers and small business owners faced clouds of uncertainty and the woes of the migrant workers merely added to the dystopia. The aforementioned industries were paralyzed. To stay afloat, businesses started laying off employees. Unemployment rose from 6.7% to 26% within a month.

The aviation industry had one of the hardest strikes from the pandemic. In 2020, there was a significant decrease of about 60.2% in passengers travelling internationally. Having its limbs already cut off, the surge of the Omicron variant had led to the massive cancellation of flights. This resulted the aviation industry to suffer losses of over Rs. 200 crores already.

“Lives or Livelihood” was the most concerning dilemma of the Indian Lockdown. The government’s primary focus was the the safety of its citizens. This subsequently resulted in temporary closing of many hospitality businesses- yet another issue for the people employed in the aforementioned industries. The pandemic has confronted the hospitality industry with an unprecedented challenge. The Federation of Hotel & Restaurant Associations of India (FHRAI) stated that the Indian hotel industry had taken a hit of over ₹1.30 lakh crore in revenue for the year 2020-21 due to the impact of the COVID-19 pandemic.

The entertainment industry saw a contraction in revenues due to the pandemic. The Film industry works on a line of agreements between production houses, artists, investors, sponsors, promoters, distributors, theatres and licensors. Due to COVID the risk of poor performance of the artist was increased and the industry had to take care of the health of their artists as well, all the while losing millions in revenue.

While the impact was unceremonious to several industries, quite a few industries hit the big leagues in this period. Pharma industries developing APIs being one of them. COVID-19 pandemic was the opportunity that could bring them under the radar.

India contributes the second largest share of pharmaceutical and biotech workforce in the world. The pharmaceutical industry saw remarkable momentum over the past year ensuring access to medicines that help tackle COVID-19. There was nothing short of a rat-race among the companies for being awarded with the contract of developing the vaccine. The union budget of 2020-21for healthcare was amounting to ₹67,112 crore which eventually increased to ₹2.23 lakh crore due to the pandemic situation. The industry is also looking for simplification of various processes to enhance ease of doing business for the private sector companies.

Keywords: COVID-19, India, Entertainment, Aviation, Hospitality, Pharmaceutical, Pre-COVID, Post-COVID, Damage, Recovery, Recession

Suggested Citation

Chakraborty, Aritro, Impact of COVID-19 in India-Pharma vs Aviation; Entertainment; Hospitality (May 10, 2022). Available at SSRN: https://ssrn.com/abstract=4166466 or http://dx.doi.org/10.2139/ssrn.4166466

Aritro Chakraborty (Contact Author)

Shiv Nadar University ( email )

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