JOIN USTravel ban could impact 1 percentage point of India's GDP: SBI Report
The coronavirus outbreak could impact close to one percentage point of India’s GDP through trade, hotels and transport channels’ disruption between 2019-20 and 2020-21, according to a State Bank of India (SBI) report.
India could lose an estimated 3 million tourists in the calendar year 2020 and foreign exchange of about $7 billion in related revenues due to travel ban across countries.
“Considering these numbers on an aggregate basis, the pandemic shock could have a 90 basis point impact on India’s GDP from trade, hotels and transport in between 2019-20 and 2020-21,” the paper said.
Various estimates suggest that China alone accounts for 3% of all foreign tourist arrivals into India. Due to the coronavirus pandemic, the tourism industry may lose revenue worth $ 550 mn in the near future.
It said the inoperability analysis of three sectors – transport, tourism and hotels – show a significant impact on demand and hence output.
As the number of coronavirus cases rise, the economic impact is expected to accrue from supply-chain risk which may link up with exports in pharmaceutical sectors.
With imports standing at 68%, China is a dominant supplier of bulk drugs & drug intermediates to India. The outbreak will force manufacturers to look for alternate suppliers and lead to the increase in domestic prices
On the direct export side, a set of commodities may see some disruption where China is an important export destination.