Open AccessGovernance and Economic Impact of Covid-19 in Indian Federation
Author(s) -
V N Alok,
Madhulika Jatoliya,
Animesh Pareek
Publication year - 2021
Publication title -
indian journal of public administration/indian journal of public administration
Language(s) - English
Resource type - Journals
eISSN - 2457-0222
pISSN - 0019-5561
DOI - 10.1177/00195561211045099
Subject(s) - gross domestic product , revenue , pandemic , economics , fiscal space , real gross domestic product , deficit spending , recession , fiscal policy , government (linguistics) , economic policy , consolidation (business) , government spending , government revenue , covid-19 , monetary economics , development economics , macroeconomics , finance , market economy , debt , welfare , medicine , linguistics , philosophy , disease , pathology , infectious disease (medical specialty)
In the year 2019–2020, Indian economy was already on its trough and the incidence of coronavirus pandemic in 2020–2021 has further deteriorated the economic condition, limiting the fiscal space of the government. As need of the hour was to take some supportive measures to handle such an unusual situation, therefore various monetary and fiscal measures were taken by the government to overcome the impact of the pandemic. This resulted in overshooting of the fiscal deficit target set under the Fiscal Responsibility and Budget Management (FRBM) Act (2003) and made the government to revise its fiscal deficit target of 3.5% of Gross Domestic Product (GDP) in 2020–2021 Budget Estimates (BE) and 9.5% in 2020–2021 Revised Estimates (RE), and further it is projected as 6.8% of GDP for 2021–2022 (BE). After an estimated 7.7% pandemic-driven contraction in 2020–2021, India’s real GDP is projected to record growth of 11.0% in 2021–2022 and nominal GDP by 15.4%. The government is expected to generate 23% more revenue and has budgeted to increase its spending by only 0.95% in FY22 as compared to FY21 (RE). In order to deal with pandemic situation, the economists have suggested more active, counter-cyclical fiscal policy to enable growth during economic downturn. However, due to lack of revenue sources, it also becomes important to strategise the path for fiscal consolidation for the ensuing years.