Covid – 19: Impact On The Indian Economy

Abstract

The onset of COVID-19, the global economy is set to undergo a sharp double-dip recession. As many international agencies have already forecasted, the global growth could be -3 per cent in 2020, which is a decline of about 6 percentage points from the baseline projection of positive 3 per cent growth with no pandemic. Such swings in growth forecasts are unprecedented, and this is due to both health scare with lots of deaths and infections and also due to the lockdown of a major part of the global economy. Added to this, the pandemic appears to be more severe in the industrialized economy. While the forecasts for 2021 suggest a sharp rebound, the trends suggest that the world may need to endure this for a longer period than expected. Unlike the global economy, Indian economy was already in a slowdown phase before the pandemic affected and there were expectations that the economy is on a recovery path. But, with the COVID-19 such hopes are not only dented rather down turn turning out to be much deeper. There are various forecasts that suggest a sharper slowdown. Some forecasts even suggest a negative growth, which was not heard in the past five decades. With the lockdown and with increasing infections, the uncertainty in the economy has increased manifolds. There are also discussions about the shape of the recovery – V or U or W. But, in our view, the most probabilistic recovery could see an elongated U shape.