The Impact of Covid-19 on the Indian Economy

 

1. INTRODUCTION

The Indian economy declined by 7.3 percent in the April-June quarter of this fiscal year, according to official figures issued by the ministry of statistics and program implementation. This is the steepest drop since the government began recording GDP statistics quarterly in 1996. After the lockdown was imposed in 2020, an estimated 10 million migrant workers returned to their home countries. What was unexpected, however, was that neither the state nor the federal governments had any information about the migrant workers who lost their jobs and lives as a result of the lockdown. Apart from creating a digital-centralized database system, the government offered assistance to migrant workers who returned to their homes during the second wave of the boom. The second wave of Covid-19 has highlighted and exacerbated existing economic vulnerabilities in India. Except for a few critical services and activities, India's $2.9 trillion economy stays closed throughout the shutdown. The lockdown had a disastrous effect on the economy by shutting down stores, cafés, factories, transportation services, and business establishments. The global epidemic has had the greatest impact on the informal economy. If the informal sectors are taken into account, India's GDP decline in April-June could be far above 8%. The two most important engines of India's economic growth are private consumption and investments. Except for agriculture, all of the major economic sectors were severely impacted. The Indian economy was already in trouble when the second wave arrived. The covid-19, when combined with the humanitarian situation and the government's silence, has revealed and exacerbated existing disparities in the Indian economy. The economy will continue to decline over the next four quarters, and a recession is unavoidable. Everyone agrees that the Indian economy would shrink for the entire year.

According to studies performed by the Centre For Monitoring Indian Economy, jobless rates rose sharply during the April-June quarter of 2021, ranging from 7.9% to 13%. MSMEs are closing their doors as a result of the economy's effects. Millions of jobs have been lost permanently, reducing consumer spending. The government should be prepared to spend billions of dollars to combat the healthcare crisis and accelerate the recovery from the covid-19-caused recession. The government should pour billions of dollars into the economy as the most effective route out of this crisis.

In response to the center's no-notice lockout, GDP growth had plummeted by 23.9 percent. In 2020-21, India's GDP dropped by 7.3 percent. This was the worst year for the Indian economy since the country's independence. India's GDP growth rate is now expected to be below 10%.

For 2020-21, the Controller General of Accounts estimates a gross tax revenue (GTR) of rupees 20 lakh crore and a net tax revenue of rupees 14 lakh crore for the center's fiscal collection. The tax revenue growth rate will be 12%, implying that gross and net tax collections for 2020-21 will be Rs 22.7 lakh crore and Rs 15.8 lakh crore, respectively.

In comparison to the budget magnitudes, this predicts increased net tax collections to the center of Rs 0.35 lakh crores. Non-tax revenues and non-debt capital receipts may still be the major areas of concern. The growth rates for non-tax revenues and non-debt capital receipts have been unpredictable in the past, but when added together, they averaged a little less than 15% in the five years leading up to 2020-21.