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The COVID-19 pandemic significantly impacted India's economy, leading to a GDP decline of approximately 7.3% and severe disruptions in public finance, international trade, and various sectors. Studies indicate that government interventions were crucial for managing the crisis, while the informal sector and vulnerable populations faced the brunt of economic fallout. The research emphasizes the need for structural reforms and diversified trade strategies to enhance resilience and prepare for future crises.

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10-11

The COVID-19 pandemic significantly impacted India's economy, leading to a GDP decline of approximately 7.3% and severe disruptions in public finance, international trade, and various sectors. Studies indicate that government interventions were crucial for managing the crisis, while the informal sector and vulnerable populations faced the brunt of economic fallout. The research emphasizes the need for structural reforms and diversified trade strategies to enhance resilience and prepare for future crises.

Uploaded by

adityarajpootkunal
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The COVID-19 pandemic has generated a significant body of research focused on its

economic impacts globally and in India. Several studies have explored how the

pandemic affected public finance, GDP growth, and international trade, providing
valuable insights into the scale and depth of the crisis.

World Bank (2020) reported that India’s economy faced its first contraction in decades,
with a GDP decline of around 7.3% during the financial year 2020–21. The report
highlighted that service sectors, particularly tourism, hospitality, and retail, were
among the most severely impacted. It also emphasized the importance of government
intervention through fiscal stimulus and liquidity measures.

Reserve Bank of India (RBI) Reports (2020-21) further analysed the deterioration in
public finance. They noted a steep fall in government revenues owing to reduced
economic activities and a simultaneous surge in public expenditure to manage the
health crisis and support the vulnerable sections of society. This imbalance led to an
increase in fiscal deficit and public debt, raising concerns about the long-term
sustainability of India's fiscal position.

Chakraborty and Thomas (2020), in their study, discussed the fiscal challenges posed
by COVID-19. They emphasized that states faced more acute financial stress due to
the combination of declining revenue sources like GST and increasing demand for
healthcare spending. They argued for a stronger federal fiscal framework and greater
financial support from the central government to the states.

KPMG India Report (2020), analysed the broader macroeconomic impacts, noting that
while the pandemic caused a severe contraction in GDP, there were signs of a K-
shaped recovery, where some sectors like technology and pharmaceuticals rebounded
faster, while others, like hospitality and real estate, continued to struggle.

Dev and Sengupta (2020), studied the( pandemic’s impact on the informal sector),
which accounts for a large share of India's GDP and employment. They found that
migrant workers, small businesses, and daily-wage earners bore the brunt of the
economic fallout, leading to long-term implications for income inequality and poverty
levels.

In terms of international trade, UNCTAD (2021) reported a global decline in trade


flows, with India’s exports and imports shrinking sharply during the initial months of
the pandemic. Sectors such as textiles, machinery, and petroleum products saw
significant reductions. FICCI Surveys (2021) observed that while exports showed
some recovery in late 2020 and 2021, uncertainties around supply chains and changing
global demand patterns continued to pose challenges.

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IMF (2021) suggested that India’s trade disruptions were not only due to domestic
lockdowns but also linked to global economic slowdowns. The IMF stressed the need
for India to diversify its trade partners and strengthen domestic manufacturing under
initiatives like “Atmanirbhar Bharat” to reduce future vulnerabilities.
Overall, the existing literature indicates that COVID-19 caused widespread disruptions
to India's public finance, economic growth, and trade sectors. However, the degree of
impact varied across different regions, industries, and population groups. Most studies
also highlight the importance of timely government interventions and structural
reforms for long-term recovery and resilience building.

SIGNIFICANCE OF STUDY

The COVID-19 pandemic created one of the most profound economic disruptions in
history, severely affecting countries worldwide, including India. Given India's position
as one of the fastest-growing economies, analysing the pandemic’s economic
consequences becomes crucial for understanding its broader implications on
development and policy. This study is significant as it provides a focused examination
of the impact of COVID-19 on three critical pillars of the Indian economy: public
finance, GDP growth, and international trade.
By analysing changes in public finance, the research highlights how government
revenues were strained and expenditures surged to tackle the health crisis, support
vulnerable populations, and stimulate economic activity. Understanding these fiscal
pressures is essential for framing better budgetary and debt management strategies in
future crises.
The examination of GDP growth patterns across sectors such as manufacturing,
agriculture, and services offers insights into the uneven effects of the pandemic,
helping policymakers identify the areas that require targeted support for recovery and
long-term resilience. Studying the shifts in India's import and export trends further
uncovers how global economic disruptions affected domestic industries and trade
balances, emphasizing the need for diversified and robust trade strategies.
This study also holds importance for academic research by contributing to the evolving
literature on pandemic economics. It provides a case study of how a major emerging
economy responded to an unprecedented shock, which can serve as a foundation for
future comparative studies or policy evaluations.
Moreover, the research aims to assist policymakers, economists, business leaders, and
students by providing evidence-based insights that can inform future planning. As
pandemics and global crises may continue to pose risks in the future, learning from the
COVID-19 experience is vital for creating more sustainable, resilient, and inclusive
economic systems.
Thus, this study not only helps in assessing the immediate impacts but also adds to the
long-term discourse on economic preparedness, crisis management, and national
resilience building.

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