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Impact of Covid-19 on the Indian Economy: An Analysis of Fiscal Scenarios

Ila Patnaik () and Rajeswari Sengupta ()

Working Papers from National Institute of Public Finance and Policy

Abstract: Amidst the economic slowdown triggered by the outbreak of the Covid-19 pandemic 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, fiscal deficit of the central government will be 6.2% of GDP.

Keywords: Fiscal deficit; Covid-19; Fiscal projections; Government borrowing; Tax revenue (search for similar items in EconPapers)
JEL-codes: E6 H2 H5 H6 (search for similar items in EconPapers)
Pages: 16
Date: 2020-09
New Economics Papers: this item is included in nep-mac
Note: Working Paper 319, 2020
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Working Paper: Impact of Covid-19 on Indian economy: An Analysis of fiscal scenarios (2020) Downloads
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