How Far Can Macro-Economic Policies Help Revive India during the Pandemic? A Computable General EquilibriumAnalysis

Barun Deb Pal, Sanjib Pohit () and Meenakshi Rajeev
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Barun Deb Pal: International Food Policy Research Institute (IFPRI), New Delhi
Meenakshi Rajeev: Institute for Social and Economic Change (ISEC), Bengaluru, India

No 147, NCAER Working Papers from National Council of Applied Economic Research

Abstract: This study uses a computable general equilibrium model to analyse whether the economic relief package offered by the Indian Government to the affected parties during the COVID-19 pandemic had any lacunae or alternative policies and institutional arrangements could have been devised to minimise the economic losses caused by the pandemic in the country. The results reveal that existing economic relief packages saved a loss of almost 3 per cent in GDP. In contrast, spending 6 per cent of GDP as cash incentive to the producers would have resulted in only a 1 per cent fall in GDP. We argue that the pandemic raises transaction costs for the producer, and thus incentivising them will boost the supply of goods and services in the economy.

Keywords: COVID-19 pandemic; CGE model; Transaction cost; Indian economy; Fiscal policy (search for similar items in EconPapers)
JEL-codes: C68 D1 D2 E62 I18 O53 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2023-04-03
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