Economic Impact Analysis of Covid-19 Implication on India’s GDP, Employment and Inequality

Biswajit Nag () and Willem van der Geest
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Willem van der Geest: Department of Economic and Social Affairs (DESA), United Nations, New York

No 2041, Working Papers from Indian Institute of Foreign Trade

Abstract: India with large-scale informal workers face a major crisis due to Covid-19 pandemic. The current paper attemptsto understand the possible growth trajectory in few major sectors and its effect on employment, possible bearing on health management and fiscal scenario. It starts with a comparative analysis of South Asian economies in terms of incidence of the disease, stringency and its impact. This is juxtaposed with the predicted impact on GDP, consumption and investment as calculated by multilateral agencies. Using the base level data provided by Asian Development Bank and the World Bank, the current paper analyses the possible decline of India’s GDP developing ‘upper’ and ‘lower’ case scenarios through various sector level assumptions. Further, employment impact is assessed using asymmetric nature of employment elasticity of output. For the year 2020-21, the model did quarterly prediction. Next, the article describes the channels in which job loss and health crisis can lead to income inequality and whether current state of health management and fiscal constraint address in short and medium term in light of the announced stimulus package. The results indicate a large-scale job losses in 2020 (16 to 34 million)and a slight recovery in 2021. This will have a severe socio-economic impact and may push the economy backward for several years.

Keywords: GDP Forecasting; Unemployment; Public policy (search for similar items in EconPapers)
JEL-codes: E17 J60 J68 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2020-08
New Economics Papers: this item is included in nep-lab and nep-mac
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