With 82,588 confirmed cases and at least 2,814 deaths worldwide, the human cost of the deadly novel coronavirus (COVID-19) is fast mounting even as its economic fallout threatens an already ailing world economy.
As the epicentre of the virus, China -- the world’s second-largest economy --has come to a virtual standstill,triggeringa chain reaction across the globe as stock markets and prices of industrial commodities see a marked dip.
With the virus spreading to countries far and wide, economists believe trillions of dollars will be wiped off world financial markets if the outbreak is not contained.
In India, which is a net importer of China with $56 billion, the virus has adversely affected the market through supply chain disruptions. About 18 per cent of India’s total goods import is from China, including electronics, consumer durables, auto components and pharma bulk drugs.
Even though India’s top pharma companies say they have adequate raw material stocks for a few more months, industry insiders worry that continuing supply constraints may lead to shortages of blood pressure and antibiotic drugs in case of a prolonged outbreak.
It is little surprise then that local drug prices have already begun climbing and further supply constraints could cause a spike in inflation. Given that the country’s core inflation hit a five-month high in January and there was a rise in headline inflation as well, there is little room for the Reserve Bank of India to tighten monetary policy.
Along with pharma, India is a big importer of Chinese electronics, consumer durables and auto components. The virus is also expected to hit Indian exports to China, especially in the area like petrochemicals as India exports 34 per cent of its total petrochemicals to the neighbouring country.
Given this overdependency and the upcoming shortages in view of the outbreak, industry insiders have suggested that the government take a proactive stand by incentivising active pharmaceutical ingredient manufacturing in India and slash duty on raw materials that will be imported from other markets.
“China’s coronavirus is turning out to be a major disrupter to India’s $37-billion drug production,”said Abhay Pandey, National President, All Food and Drug Licence Holder Foundation.
“We have suggested the government to control the exports of pharmaceutical finished products as domestic supply shortages may occur within a few months,” he added.
However, there some economists who see this disruption as a golden opportunity for Indian manufacturers to grab their share from Chinese competitors who have come to dominate markets such as mobile handsets and electronics in recent years.
Financial experts believe the slide in global indices as well as oil prices present a great buying opportunity of snapping up bargains before the markets rebound.
China is the world’s biggest manufacturing hub and its current crisis may just accelerate the BJP government’s Make in India programme and boost local manufacturing to tide over any shortage.
As the human and financial losses mount, India can only hope that it does not join a growing line of coronavirus casualties.