Abstract
This paper estimates the loss of output and employment for the Indian economy over the financial year 2020–21 as a result of the COVID-19 pandemic. Using a capacity utilization ratio method, we estimate that the countrywide lockdown disrupted both demand and supply, with a loss of GVA for 2020–21 of 1.7% under an optimistic approach, and a fall in employment of 0.34%, with a loss of 1.56 million jobs. The pessimistic approach suggests a fall in GVA of almost 10%, with employment falling by 7.6%, and around 35.4 million jobs lost in 2020–21. Future growth will depend on the duration of the containment measures, the exit strategy from the lockdown, and the success of the policy responses in restoring business and consumer confidence, by increasing aggregate demand through fiscal expansion to foster investment and employment.
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