IDEAS home Printed from https://ideas.repec.org/p/ind/igiwpp/2020-026.html
   My bibliography  Save this paper

Impact of Covid-19 on Indian economy: An Analysis of fiscal scenarios

Author

Listed:
  • Ila Patnaik

    (National Institute of Public Finance and Policy)

  • Rajeswari Sengupta

    (Indira Gandhi Institute of Development Research)

Abstract

Amidst the economic slowdown triggered by the outbreak of the Covid-19 pandemic in India's there have been many demands for the government to announce a large fiscal stimulus to support the economy. Economic growth and tax revenues remain uncertain in 2020-21 making it challenging for thegovernment to finance any addition to the fiscal deficit. In this paper we work out alternative scenarios of fiscal deficit for 2020-21. We find that in our baseline scenario, assuming a 5 contraction in realGDP and a 14.4 contraction in net tax revenue, the fiscal deficit of the central government will be 6.2 of GDP.

Suggested Citation

  • Ila Patnaik & Rajeswari Sengupta, 2020. "Impact of Covid-19 on Indian economy: An Analysis of fiscal scenarios," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2020-026, Indira Gandhi Institute of Development Research, Mumbai, India.
    • Handle: RePEc:ind:igiwpp:2020-026
    as

    Download full text from publisher

    File URL: http://www.igidr.ac.in/pdf/publication/WP-2020-026.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Singh, Nirvikar & Srinivasan, T. N., 2004. "Fiscal Policy in India: Lessons and Priorities," Santa Cruz Center for International Economics, Working Paper Series qt67t3p20w, Center for International Economics, UC Santa Cruz.
    2. S. Mahendra Dev & Rajeswari Sengupta, 2020. "Covid-19: Impact on the Indian economy," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2020-013, Indira Gandhi Institute of Development Research, Mumbai, India.
    3. Patnaik, Ila & Pandey, Radhika, 2020. "Moving to Inflation Targeting," Working Papers 20/316, National Institute of Public Finance and Policy.
    4. Rangarajan, C. & Srivastava, D. K., 2011. "Federalism and Fiscal Transfers in India," OUP Catalogue, Oxford University Press, number 9780198070986.
    5. Choudhury, Mita & Mohanty, Ranjan K., 2020. "Role of National Health Mission in Health Spending of States: Achievements and Issues," Working Papers 20/317, National Institute of Public Finance and Policy.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. S Rajamohan & J Jenefer & A Sathish, 2021. "Impact of COVID-19 on FMCG Sector," Shanlax International Journal of Management, Shanlax Journals, vol. 8(4), pages 69-74, April.
    2. Sacchidananda Mukherjee & Shivani Badola, 2021. "Public Financing of Human Development in India: A Review," Indian Journal of Human Development, , vol. 15(1), pages 62-81, April.
    3. Goswami, Binoy & Mandal, Raju & Nath, Hiranya K., 2021. "Covid-19 pandemic and economic performances of the states in India," Economic Analysis and Policy, Elsevier, vol. 69(C), pages 461-479.
    4. Pandey, Radhika & Sapre, Amey & Sinha, Pramod, 2020. "What do we gain from Seasonal Adjustment of the Indian Index of Industrial Production (IIP)?," Working Papers 20/322, National Institute of Public Finance and Policy.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Beyer, Robert C.M. & Franco-Bedoya, Sebastian & Galdo, Virgilio, 2021. "Examining the economic impact of COVID-19 in India through daily electricity consumption and nighttime light intensity," World Development, Elsevier, vol. 140(C).
    2. Sadananda Prusty & Anubha & Saurabh Gupta, 2021. "On the Road to Recovery: The Role of Post-Lockdown Stimulus Package," FIIB Business Review, , vol. 11(2), pages 206-224, June.
    3. Moumita Basu & Rilina Basu & Ranjanendra Narayan Nag, 2022. "A Dependent Economy Model of Employment, Real Exchange Rate and Debt Dynamics: Towards an Understanding of Pandemic Crisis," Foreign Trade Review, , vol. 57(1), pages 85-113, February.
    4. Kumar, Pavan & Singh, S.S. & Pandey, A.K. & Singh, Ram Kumar & Srivastava, Prashant Kumar & Kumar, Manoj & Dubey, Shantanu Kumar & Sah, Uma & Nandan, Rajiv & Singh, Susheel Kumar & Agrawal, Priyanshi , 2021. "Multi-level impacts of the COVID-19 lockdown on agricultural systems in India: The case of Uttar Pradesh," Agricultural Systems, Elsevier, vol. 187(C).
    5. Goshu Desalegn & Anita Tangl & Maria Fekete-Farkas, 2022. "From Short-Term Risk to Long-Term Strategic Challenges: Reviewing the Consequences of Geopolitics and COVID-19 on Economic Performance," Sustainability, MDPI, vol. 14(21), pages 1-22, November.
    6. Rajeswari Sengupta & Harsh Vardhan, 2023. "India’s Credit Landscape in a Post-pandemic World," India Studies in Business and Economics, in: Indrani Gupta & Mausumi Das (ed.), Contextualizing the COVID Pandemic in India, chapter 0, pages 273-295, Springer.
    7. Małgorzata Dudzińska & Marta Gwiaździńska-Goraj & Aleksandra Jezierska-Thöle, 2022. "Social Factors as Major Determinants of Rural Development Variation for Predicting Epidemic Vulnerability: A Lesson for the Future," IJERPH, MDPI, vol. 19(21), pages 1-24, October.
    8. Singh, Nirvikar & Srinivasan, T. N., 2004. "Foreign Capital, Inflation, Sterilization, Crowding-Out and Growth: Some Illustrative Models," Santa Cruz Department of Economics, Working Paper Series qt1m09m3kf, Department of Economics, UC Santa Cruz.
    9. Mohapatra, Biswajit & Tripathy, Sushanta & Singhal, Deepak & Saha, Rajnandini, 2022. "Significance of digital technology in manufacturing sectors: Examination of key factors during Covid-19," Research in Transportation Economics, Elsevier, vol. 93(C).
    10. Rajiv Kumar & Alamuru Soumya, 2010. "Fiscal Policy Issues for India after the Global Financial Crisis (2008–2010)," Working Papers id:2912, eSocialSciences.
    11. Ghosh, Amlan & Mukherjee, Abhijit, 2020. "COVID-19 and Property-Liability Insurance in India: Impact and Prospect," MPRA Paper 103357, University Library of Munich, Germany.
    12. Darshini J S & K Gayithri, 2019. "Fiscal dependency of States in India," Working Papers 433, Institute for Social and Economic Change, Bangalore.
    13. Pinaki Chakraborty & Shatakshi Garg, 2018. "Fiscal pressure of migration & horizontal fiscal inequality: Evidence from Indian experience," WIDER Working Paper Series 004, World Institute for Development Economic Research (UNU-WIDER).
    14. Anuradha Patnaik, 2022. "Measuring Demand and Supply Shocks From COVID-19: An Industry-Level Analysis for India," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 16(1), pages 76-105, February.
    15. Jyotirmayee Behera & Ajit Kumar Pasayat & Harekrushna Behera, 2022. "COVID-19 Vaccination Effect on Stock Market and Death Rate in India," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 29(4), pages 651-673, December.
    16. Pandey, Radhika & Sapre, Amey & Sinha, Pramod, 2020. "What do we gain from Seasonal Adjustment of the Indian Index of Industrial Production (IIP)?," Working Papers 20/322, National Institute of Public Finance and Policy.
    17. R. S. Deshpande, 2022. "Disaster management in India: are we fully equipped?," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 24(1), pages 242-281, December.
    18. Amandeep Kaur & Munish Saini, 2021. "A Study on the Impact of the COVID-19 Pandemic on Primary, Secondary, and Tertiary Sectors of the Indian Economy," International Journal of Asian Business and Information Management (IJABIM), IGI Global, vol. 12(3), pages 1-25, July.
    19. Kumar B, Pradeep & R, Ramya, 2020. "Ownership Pattern of Public Debt in India: A Study," MPRA Paper 103738, University Library of Munich, Germany, revised 20 May 2020.
    20. Sugata Marjit & Gouranga Gopal Das, 2022. "Immunity-Driven Comparative Advantage and Its Palliative Effect on Social Health and Inequality - A Theoretical Perspective," CESifo Working Paper Series 9569, CESifo.

    More about this item

    Keywords

    Fiscal deficit; Covid-19; Fiscal projections; Government borrowing; Tax revenue;
    All these keywords.

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • H6 - Public Economics - - National Budget, Deficit, and Debt

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ind:igiwpp:2020-026. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Shamprasad M. Pujar (email available below). General contact details of provider: https://edirc.repec.org/data/igidrin.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.