Author: Ila Patnaik and Rajeswari Sengupta
Title: Impact of Covid-19 on Indian Economy: An Analysis of Fiscal Scenarios
Abstract: Amidst the economic slowdown triggered by the outbreak of the Covid-19 pan-demic in India there have been many demands for the government to announce a large fiscal stimulus to support the economy. Economic growth and tax revenues remain uncertain in 2020-21 making it challenging for the government to finance any addition to the fiscal deficit. In this paper we work out alternative scenarios of fiscal deficit for 2020-21. We find that in our baseline scenario, assuming a 5% contraction in real GDP and a 14.4% contraction in net tax revenue, the fiscal deficit of the central government will be 6.2% of GDP.
Keywords: Fiscal deficit, Covid-19, Fiscal projections, Government borrowing, Tax revenue.
JEL Code: E6, H2, H5, H6