IMPACT OF COVID-19 PANDEMIC ON THE INDIAN ECONOMY: A CRITICAL ANALYSIS
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Abstract
ABSTRACT
This paper is an analysis of the economic impact of the Covid-19 pandemic in India. Even prior to the pandemic, the Indian economy was marked by a slowdown of economic growth and record increases in unemployment and poverty. Thus, India’s capacity to deal with a new crisis was weak when the pandemic hit in March 2020. The economic crisis after March 2020 affected all the sectors of the Indian economy. In agriculture, farmers were faced with broken supply chains, lack of market outlets, poor demand and falling output prices. In industry, micro and small enterprises were the most acutely affected. The crisis led to a loss of employment to the tune of at least 15 million. Using an Input-Output (I-O) framework, we create four scenarios of losses to the Indian economy. We estimate that India’s GDP growth rate in 2020-2021 may range from –4.3% to –15%. The government’s economic response till October 2020 was seriously deficient on demand side interventions. The government was hesitant to expand budgetary spending because it feared a rise in fiscal deficit. Given this fiscal stance of policy, the chances of an early revival in the Indian economy appear dismal.
IMPACTO DE LA PANDEMIA COVID-19 EN LA ECONOMÍA INDIA: UN ANÁLISIS CRÍTICO
RESUMEN
Analizamos el impacto económico de la pandemia Covid-19 en la India. Antes de la pandemia, hubo una desaceleración del crecimiento económico y un aumento récord del desempleo y la pobreza. Por lo tanto, la capacidad para hacer frente a una nueva crisis era débil cuando la pandemia golpeó en marzo de 2020. La crisis económica posterior afectó a todos los sectores económicos. Los agricultores se enfrentaron a cadenas de suministro rotas, falta de mercados, escasa demanda y caída de los precios de producción. En la industria, las microempresas y las pequeñas empresas fueron las más afectadas. La crisis provocó una pérdida de empleo de al menos 15 millones. Usando una matriz de insumo-producto (I-O), creamos cuatro escenarios de pérdidas. Estimamos que la tasa de crecimiento del producto interno bruto (PIB) de la India en 2020-2021 puede oscilar entre el –4.3% y el –15%. La respuesta del gobierno hasta octubre de 2020 fue muy deficiente en las intervenciones del lado de la demanda. Dudaba en expandir el gasto presupuestario porque temía un aumento del déficit fiscal. Dada esta orientación fiscal, las posibilidades de una pronta reactivación económica parecen desalentadoras.
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