System Dynamics Modeling to Understand the Impact of Covid-19 on Indian Economy

Abstract

COVID-19 has led to a severe health crisis. This sudden and wide impact of corona virus has brought the global economy to its knees. The virus has spread across the world through the chain of transmission. In India, the first case of COVID-19 was reported in the month of February 2020 and has spread drastically within past four months. As a preventive measure, the government announced complete lockdown in the month of March 2020 to stop this pandemic situation in India (Suri, April 30, 2020). This invisible virus has compelled many business organizations to shutdown their respective activities and to follow social distancing norms. The outbreak of COVID-19 has disrupted the Chinese economy first and then it led to affect global economy. This paper models the impact of COVID-19 on Indian economy (Sansa, 2020). The researcher shows the impact using System Dynamics modeling approach. The causal loop diagram was used to explain the causality of series of events. The results show that the strategy of shutdown/lockdown tends to increases the unemployment and ultimately causes negative impact on Indian Economy. In order to revive economy, we recommends, that the focus to be shifted on the factors such as new startups, Government relief funds, development of COVID-19 vaccine, generating employment and better health care facilities to reduce the spread of COVID-19 and strengthen Indian economy.