COVID-19 has changed the way the ‘normal’ world functions. It has rattled the fundamentals and we are all trying to cope with the ‘new normal’ – a term that is amongst the most trending today!
Industries, across sectors and states in India and globally, have been greatly affected. Some bearing the brunt directly, while others facing the challenges indirectly, thanks to supply chain disruptions. While some businesses are sailing the tailwinds, most are grappling with the effects of this global pandemic. Consumer and business dynamics have literally changed overnight. This has forced us, as people and as organisations, to re-evaluate our preparedness to fight the disease and secure the future, for ourselves and our stakeholders.
Gujarat is the third-largest economy of India, contributing as much as 9% to national GDP. It has 4 larger economic districts i.e. Ahmedabad, Rajkot, Surat and Vadodara. The scenario is different from the rest of the nation as Manufacturing, instead of Services, is its biggest contributor to the state’s economy.
As an industry or organisation or business, navigating this COVID-19 pandemic and its aftermath is a huge challenge, no doubt. It needs a methodology – a clear approach – to see through all the chaos, bring in a method to the madness, so to speak. It is crucial to clearly understand the economic landscape at a macro level, before and during this pandemic, to help extrapolate what could perhaps be the ‘after’ state of affairs at a micro-level.
It is with this thought process that Levers For Change (LFC), a decade-old Business Transformation Consultancy based in Indore, Madhya Pradesh, embarked on a detailed study, in an earnest attempt to understand, and thereon share insights on, this truly unprecedented pandemic and its impact on the Indian economy.
A glimpse into the report – Gujarat
The third-largest, and among the most impacted, state of Gujarat from the economy point of view:
Gujarat is the third-largest economy of India, contributing as much as 9% to National GDP. As mentioned above, its scenario is different from the rest of the nation as Manufacturing, instead of Services, is its biggest contributor to the state’s economy.
Manufacturing is the major contributor at 47% of GSDP. Drastic loss in revenue as manufacturing of non-essentials have come to a halt. Surat diamond processing hub to lose Rs.8,000 crore in exports as Hong Kong declares state of emergency.
Services contribute to 35% of GSDP. Trade, repair, hospitality, transportation, real estate transactions account for 51% of services activities. Non-essentials in these have been impacted heavily due to lockdown and Housing projects delayed by 9 months owing to lack of labour.
Agriculture contributing to 18% of GSDP. Farmers to suffer losses owing to expensive logistics and inefficient markets. Further, harvests being traded 11% below MSP. Cotton consumption to drop by 25-30 lakh bales; prices expected to drop by 10%. Mango harvest expected to suffer a 40% loss.
Gujarat Recovery – Given the current rate of spread of COVID, it is clear that the state needs more time to come out of lockdown. However, Surat and Rajkot, where the spread has been controlled, can come out of lockdown a tad earlier. Export-oriented manufacturing at Surat will take more time to stabilise as international trade has been hampered by COVID; low-cost Agri-input industry at Rajkot may see an early revival.