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What are the major economic impact of COVID-19 pandemic in India

Explain the economic impact of COVID-19 pandemic on the Indian economy and how it has changed the government's fiscal policy.
economy covid-19
Amrita Preparing for Civil Services
Answered 3 years ago
The COVID-19 pandemic had a significant impact on India's economy. Some of the major economic impacts include:
  • Sharp decline in economic activity: The pandemic led to a significant decline in economic activity due to the nation-wide lockdowns, resulting in a decline in GDP by 7.7% in the fiscal year 2020-21.
  • Income losses and job losses: Due to the economic slowdown, millions of people in India lost their jobs, resulting in a decline in demand, income, and spending.
  • Fiscal and monetary policies: The Indian government implemented fiscal and monetary policies to alleviate the economic downturn, such as a stimulus package of $265 billion, easing the monetary policy, and implementing reforms to support vulnerable sectors.
  • Rise in public debt: Due to the economic slowdown and government stimulus, India's public debt rose to 87.2% of GDP in 2020-21, resulting in potential risks to the economy.
  • Increased digitalization: The pandemic has led to a shift towards digitalization in India, resulting in increased demand for e-commerce, fintech, and digital payments, leading to a boost in the digital economy.
Overall, the COVID-19 pandemic has had a severe impact on the Indian economy, leading to cash shortages, job losses, and a decline in economic activity. However, government actions and reforms have helped to mitigate the impact and pave the way for economic recovery.