Working Paper: Covid-19: Impact on the Indian Economy

Author: S. Mahendra Dev and Rajeswari Sengupta

Title: Covid-19: Impact on the Indian Economy

Abstract: The outbreak of the Covid-19 pandemic is an unprecedented shock to the Indian economy. The economy was already in a parlous state before Covid-19 struck. With the prolonged country-wide lockdown, global economic downturn and associated disruption of demand and supply chains, the economy is likely to face a protracted period of slowdown. The magnitude of the economic impact will depend upon the duration and severity of the health crisis, the duration of the lockdown and the manner in which the situation unfolds once the lockdown is lifted. In this paper we describe the state of the Indian economy in the pre-Covid-19 period, assess the potential impact of the shock on various segments of the economy, analyse the policies that have been announced so far by the central government and the Reserve Bank of India to ameliorate the economic shock and put forward a set of policy recommendations for specific sectors.

Keywords: Covid-19, pandemic, economic downturn, aggregate demand, supply chain, informal sector, financial institutions, fiscal policy.

JEL Code: E2, E5, E6, G2