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COVID-19 and India's Macroeconomy: Pre-existing Conditions, Performance, and Prospects

Author

Listed:
  • Chinoy, Sajjid Z.

    (J.P. Morgan)

  • Jain, Toshi

    (J.P. Morgan)

Abstract

This paper seeks to undertake a holistic assessment of the pandemic’s impact on India’s macroeconomy. It does so by posing and answering four questions: First, what was the state of the economy coming into COVID-19, and what contributed to the pre-pandemic slowdown? This will have an important bearing on the post-pandemic outlook. Second, how complete is the economic recovery from COVID-19 expected to be and where are the most visible divergences? More generally, what are the steady-state macroeconomic implications of a K-shaped recovery? Third, where is growth likely to come from in the aftermath of the pandemic? Household Consumption? Private Investment? Government Capex? Exports? Which growth drivers have the potential to fire and which may be dormant for a while? Fourth, what do we know about potential growth coming into the pandemic? To what extent has the slowdown of total factor productivity (TFP) growth impacted potential growth since the global financial crisis? What are the macro determinants of TFP growth and what are the reform implications going forward?

Suggested Citation

  • Chinoy, Sajjid Z. & Jain, Toshi, 2022. "COVID-19 and India's Macroeconomy: Pre-existing Conditions, Performance, and Prospects," India Policy Forum, National Council of Applied Economic Research, vol. 18(1), pages 87-138.
    • Handle: RePEc:nca:ncaerj:v:18:y:2022:i:2022-1:p:87-138
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    File URL: https://www.ncaer.org/publication/india-policy-forum-2021
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    More about this item

    Keywords

    India; Growth; COVID; Consumption; Investment; Exports; Total Factor Productivity;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F10 - International Economics - - Trade - - - General

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