1.

4 RESEARCH QUESTIONS
1. How did the COVID-19 pandemic a ect India's public nance
particularly in terms of government revenue, expenditure, and scal
de cit trends
2. What was the impact of COVID-19 on India's GDP growth and sector-
wise economic performance before, during, and after the crisis?
3. How did the pandemic in uence India's import and export patterns,
and what were the key changes in external trade dynamics?

1.5 OBJECTIVES
The main objectives are as follows-
a. To critically analyse the e ects of the COVID-19 pandemic on India's
public nance, including trends in government revenue, expenditure
patterns, and scal de cit levels during and after the crisis perio

b. To assess the impact of COVID-19 on India's GDP growth trajectory,

identifying sector-wise disruptions and recovery patterns across
di erent phases of the pandemic

c. To evaluate changes in India's international trade dynamics,

speci cally examining the uctuations in import and export volumes
trade balance, and key policy responses during the COVID-19
pandemic.

1.6 RESEARCH METHEDOLOGY

This study uses a descriptive research design based on secondary data. Data is
collected from government reports (Union Budget, Economic Survey, RBI
reports), international sources (World Bank, IMF), and reputable journals and
news articles. The research focuses on three areas:

1. Public nance (revenue, expenditure, scal de c

2. GDP growth (sector-wise analysis)
3. Import-export trends (trade volumes and policy changes)

4
1.7 Chapter Planning
Chapter 1: Introduction
Provides background on COVID-19’s economic impact, reviews existing literature,
defines objectives, research questions, methodology, and study limitations.

Chapter 2: Impact on GDP and Sectors

Analyzes GDP trends during COVID-19, sector-wise disruptions, and recovery
measures post-pandemic.

Chapter 3: Impact on Public Finance

Examines changes in government revenue, expenditure patterns, and fiscal deficit
levels during and after COVID-19.

Chapter 4: Import-Export Patterns

Studies India’s trade performance during the pandemic and policy
responses to manage disruptions.

Chapter 5: Conclusion and Suggestions

Summarizes key findings and provides recommendations based on the
study.

5
LIMITATIONS

While this study provides important insights into the impact of COVID-19 on India's
public finance, GDP growth, and international trade, it has certain limitations.
Firstly, the research is based primarily on secondary data such as government reports,
international publications, and academic studies. The rapidly changing nature of the
pandemic means that some data may be preliminary or subject to later revision. Real-
time economic effects, especially in unorganized and informal sectors, may not be fully
captured.

Secondly, the study focuses mainly on macroeconomic indicators and does not provide
an in-depth analysis of sector-specific impacts across different states and regions of
India. Differences in state-level policy responses and recovery patterns are beyond the
scope of this research.

Thirdly, external factors such as geopolitical developments, global supply chain shifts,
and international policy changes, which may have influenced India’s trade and growth
patterns during the pandemic, have not been deeply analysed.

Finally, given the ongoing nature of economic recovery and uncertainties such as new
COVID-19 variants, the study represents only a snapshot of a broader, evolving
situation. Future studies with updated data and longitudinal analysis would be
necessary to fully understand the long-term effects.
These gaps highlight opportunities for further research, particularly in studying the
microeconomic impacts, regional disparities, informal economy challenges, and long-
term structural changes triggered by the pandemic.

6
 CHAPTER –

H GC G SV GF H GL D F IB G E HB CG F B

: : N

The COVID-19 pandemic brought an unprecedented shock to India's economic

growth trajectory. In the financial year 2020–21, the Indian economy contracted by
7.3%, marking its first full-year negative growth since independence. The imposition
of strict nationwide lockdowns, supply chain disruptions, demand collapse, and
mobility restrictions severely impacted almost every sector of the economy. The
services sector, which contributes over half of India's GDP, experienced significant
setbacks, particularly in areas such as hospitality, tourism, aviation, and retail trade,
where activity came to a near standstill during the peak of the crisis. Manufacturing
output also declined sharply due to factory closures and reduced consumer demand,
although it showed signs of recovery in the latter part of the year as restrictions
eased.
Conversely, the agricultural sector demonstrated notable resilience during the
pandemic, growing at 3.6% in 2020–21. A good monsoon season, government
support programs, and relatively less disruption in rural areas contributed to this
positive performance, highlighting agriculture’s stabilizing role in the broader
economy. Meanwhile, sectors heavily dependent on physical mobility and
discretionary spending faced long-lasting damage. Construction activity witnessed a
sharp decline initially but rebounded gradually with the easing of lockdown measures
and the announcement of government stimulus packages. The financial sector, while
relatively stable, experienced challenges related to asset quality and credit growth.
The pandemic thus exposed critical vulnerabilities in India's economic structure,
emphasizing the need for stronger healthcare systems, diversified supply chains, and
more resilient service sectors. It also accelerated certain structural shifts, such as the
rapid adoption of digital technologies and remote working models. The post-COVID
recovery, aided by policy interventions like the Atmanirbhar Bharat package and
increased public investment, eventually set the stage for a gradual rebound. However,
the uneven sectoral impact continues to influence the pace and shape of India's
economic recovery in the years following the pandemic.

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: 1, : -. . :/

As discussed in detail in Dev and Sengupta (2022a), real GDP (gross domestic
product) growth rate had been on a downward trajectory since 2015-16 and by 2019-
20, it had slowed down to 3.9%, the lowest level since 2002-03 (see Figure 1 for
example). Unemployment reached a 45-year high increasing from 2.2% in 2011-12
to 6.1% in 2017-18. A major driver of growth in any economy is investment by the
private corporate sector. In the preCovid19 period, private sector investment had
been declining. According to the official data, gross fixed capital formation (GFCF)
as per cent of GDP declined from 34.3% in 2011-12 to 28.6% in 2019-20. In 2019-
20, it grew (in real terms) only by 1.1% down from 11.2% in the previous year.
Capex data from CMIE shows a similar picture of declining investment (see Figures
13a and 13b). Aggregate consumption expenditure (private and government) had also
been falling, for the first time in several decades. Exports of goods and services
contracted by 3.4% in 2019-20 after growing by 11.9% in the previous year; exports
of goods alone contracted sharply by 6.1%.3 In general, nonoil, non-gold exports
were pretty much stagnant in the run-up to the pandemic
Recent economic data indicates that there is slowdown in Indian economy i.e., the
GDP grow at 5 % in the first quarter of financial year 2020. By the end of the second
quarter the growth continued to witness a sharp decline and almost the economy is
clearly into an economic recession. On one side investment measured in the Gross
Fixed Capital Formation (GFCF) showed a decline trend and other side the gross
saving reduced from 34.3 % in 2011 to 28.8% in 2018.moreover the rural wage rate,
exports also get reduced. The inflation rate has reduced from 10.03 per cent in FY13
to 3.41 per cent in FY19. Low inflation rate depicts weakening of demand that would
discourage fresh investments and job creation. Falling capacity utilization, along with
excess liquidity presence in commercial banks and piling up of stock of food grains
on one side and rural distress & wage suppression together uncover the slowdown as
a demand side issue. In general, we can say that the slowdown is a demand side
problem. The GDP growth rate has been declining continuously declining due to
ineffective demand within the people. The reduction in the aggregate demand leads
to increased inventory that in turn reduced or stopped production of new goods. It
results in unemployment and low level of income. Ultimately affects the living
standards of the people with a low per-capita income.
About the last one year, more than 180 nations are in the same line of threat by the
disastrous pandemic of Corona Virus Disease 2019 or the COVID-19. The impact
and shocks created by this on the polity, society and economy in the global level is
highly overwhelming. There is high unprecedented collapse in the global supply
chains. It is therefore much care is required for economic intervention in this area. It
is the same fruit of globalisation which makes the issue worse and in this modern
globalised world, cross-country linkages were the major route of these supply chains.
WTO through its press release announced that the global trade is expected to fall by
between 13% to 32% in the current year due to this disastrous pandemic. It is very
essential to understand the interaction between the pandemic and its effect on the

8
7
economy as the questions of how, when, and in what way the problems which would
be created by this can be solved in a quick spell of time. This is also the time when
the IMF claimed that since the Great Depression of 1930’s, the world economy as a
whole is going through a sharply negative downturn in its growth rate. In other
words, we can say that the global economy is grinding to a halt. In a narrow sense we
can approximate that the beginning of the 2020 started witnessing a particular divide
of the time globally, which can be roughly defined as a pre-corona and a post-corona
period.

9
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 I 2 41

Figure 5 – Quarter wise GDP growth per year

eQ PT T R T fV C T T d d T e E bY f TP
VT P P P a P Q P T Q F T f f
f T P P T d d Y f P TP P Q PT T P P Ed dY
Q fV TT I T If T T P T P f P Q P Q P T T ADG d Q P
F P PT fP P T PT P QT P P T TQ
T P I P PT P T I R PT R T Y f fV P IV I T P Q f V
PT PT P T P P P T P QQfV P P YT
C T T T V QQ T T If Y f TP T P Va T P T P T
T P If VQ T P Q P P PT f

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9
 Table 1– Synopsis of the lockdown phases

GROWTH STRATEGY AND POLICY IMPLICATIONS

Economic policy making is central to the growth and sustainment of any nation. The
policy effectiveness is based on the righteous implementation of a well-designed plan
of action which altogether binds and establish the macroeconomic stability. It is very
important to analyse the economic impact of COVID-19 on the actual and expected
growth rate in Indian economy to understand how much and to what extent the
pandemic worsened the existing situation of economic slowdown in the country. The
need of this anomalous analysis is to be done in order to find an answer to the much
debated political and economic policies of the present government in power, so it
could be more a political question which is of clear righteousness. If we consider the
above said situation from a microeconomic perspective, there is a similar need of
analysis as same as the well-known ‘Hicksian- Slutskian’3 approach to split out the
pre-corona and post-corona impact on the total downturn effect in the Indian
economy. Looking much into the developing economy of India, what are the major
problems and impact of the pandemic on the economy briefly elucidates as even in
2008, amidst the problem of demand shock, employment was more or less affected in
the country. But now it comes to a stagnation in real effect. Moreover, this issue is
also a reverberation of supply shock with a simultaneous presence of subdued
demand and production slowdown.

, : , :

WHO director-general, Dr. Tedros Adhanom Ghebreyesus explained that this is not
just a public health crisis, it is a catastrophe that will affect every sector. Hence, each
sector must be involved in the fight against the pandemic . The numerous business
entities will limit their industry operations as a result of the economic disruption of
the industries that are responsible for regulation of the growth due to COVID-19
pandemic.

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Primary Sector:
The primary sector incorporates industries associated with the extraction and
fabrication of raw materials. This sector provides employment to about 43.21% of
the population in India and contributes about 16.1% of the Indian GDP. It provisions
raw materials to the secondary sector and furnishes basic necessities of human life

Table 2: Economic impact of COVID-19 on primary sector

Secondary sector:
The secondary sector provides employment to around 24.89% of the population in
India and offers about 29.6% of the Indian GDP. It embraces industries that
manufacture and distributes finished goods or indulged in construction activities,
consequently providing support to both the primary and service sector.

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 Table 3– Economic impact of COVID-19 on secondary sector

Tertiary sector

The service sector has employed about 31.9% of the Indian population and contributes to
around 54.3% of the Indian economy.

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 Table 4- Economic impact of COVID-19 on tertiary sector

, , ::, 4, , : ,4

• Countrywide lockdown along with fiscal steps, coupled with fantastic monetary
measures implemented by the RBI in order to facilitate relief to all citizens and in
specific to the disadvantaged and vulnerable population of the country.
• Government has given clear directions to employers to not terminate any employees
or perform any wage cuts, in specific of low-paid, contractual or casual workers,
along with paid sick leaves and insurance covered unemployment allowance.
• Before COVID-19 hit, in the Fiscal Responsibility and Budget Management Act in the union
budget in Jan 2020, India had invoked the ‘escape clause.
• In addition to this, the RBI has injected cash into the system to cut down the rate of interest,
relaxed lending norms for financial institutions and relaxed repayments for a duration of three
months.
• The government has created a Unified Platform in order to bring key government
stakeholders, logistic providers and industry experts and champions in order to successfully

14
13
 identify and satisfy the supply-demand shortages in the essential supplies required to
overcome COVID-19.
• A comprehensive extensive resource called the Invest India Business Immunity Platform has
been designed to help investors and businesses receive updates in real-time of India’s active
response to COVID-19. This platform keeps regular tabs on various developments in the
controlling of the virus, provides quick latest information on all the state and central
government initiatives, giving special access to provisions, and resolves and satisfies any
kind of queries effectively.

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 / :,

B E F DB H GC G SV GF F I H AE CF F B

TS F G GF

The COVID-19 pandemic caused a major shock to the global economy, and India
was no exception. Among the many areas affected, India’s public finance system
faced extraordinary pressure. Before the pandemic, India was already grappling with
issues such as a slowing GDP growth rate, rising fiscal deficits, and increasing public
debt. The outbreak of COVID-19 and the nationwide lockdowns further worsened
the situation, severely impacting government revenues and leading to a sharp rise in
public expenditure.
With economic activities coming to a halt, major revenue sources such as Goods and
Services Tax (GST), income tax, and customs duties declined significantly. At the
same time, government spending surged as emergency measures were taken to
support healthcare infrastructure, provide relief packages for vulnerable populations,
and introduce stimulus programs to revive the economy. As a result, the fiscal deficit
for the year 2020–21 exceeded budgeted targets by a wide margin, and public debt
levels rose to historic highs.
State governments, which are heavily dependent on central transfers and their own
tax collections, also faced serious financial stress, leading to cuts in development
spending and borrowing from the market. The pandemic exposed structural
weaknesses in India’s public finance management, highlighting the need for reforms
in fiscal federalism, expenditure prioritization, and debt sustainability.
This study focuses on analysing the impact of COVID-19 on India's public finance
by examining trends in revenue collections, government expenditures, fiscal deficits,
and debt levels. It aims to understand how the crisis strained the financial capacity of
both the central and state governments and to explore the fiscal measures adopted for
economic recovery. By focusing on public finance, the study provides important
insights into the challenges and opportunities for strengthening India's economic
resilience in the post-pandemic era.

: , . , 4, : , , ,

India's economic trajectory in recent years has been marked by significant

milestones, with direct tax collections standing out as a pivotal indicator of the
nation's financial progress. Despite global economic uncertainties and domestic
challenges, India has demonstrated robust growth in its direct tax revenue.
In India, Direct taxes can broadly be classified into:

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• Personal Income Tax: Charged on the income of individuals and entities.
• Corporate Income Tax: Levied on the profits of corporations.
The Income Tax Department, under the Ministry of Finance, is responsible for the
collection and administration of direct taxes in India.

Direct tax collection over the years

Source: Press information bureau

Figure 1

The chart depicts India's direct tax collection increasing from US$ 119.8 billion in
FY18 to US$ 225.9 billion in FY24. There was a notable decline in FY20 and FY21
due to COVID-19, followed by a robust recovery in FY22 with a 41% growth, and
continued steady growth in subsequent years, reflecting sustained positive
momentum in fiscal growth. This trend indicates a strong and growing financial
environment, making it an appealing opportunity for prospective investors.

Personal income tax collections exceed corporate income tax collection

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 Source: Press information bureau
Figure 2

Over time, there has been a clear transition in the breakdown of India's direct tax
revenues, moving from Corporate Income Tax (CIT) to Personal Income Tax (PIT).
Traditionally, CIT used to dominate the direct tax revenue pie. However, in the
recent years we witnessed that PIT collection has exceeded CIT, as per the data from
Income Tax department.

, , : , ::,

Before the onset of COVID-19, the pattern of government expenditure in India

reflected a careful balancing act between promoting growth and maintaining fiscal
prudence. In 2019–20, total central government expenditure was approximately
₹27.86 lakh crore. A large proportion of this spending, nearly 85%, was directed
towards revenue expenditure, encompassing subsidies on food, fertilizers, and
petroleum, as well as payments towards defence, salaries, and interest obligations.
The government also prioritized welfare programs such as PM-KISAN and
Ayushman Bharat. Capital expenditure, which promotes asset creation and
infrastructure development, constituted roughly 15% of total spending. Despite
attempts to exercise fiscal discipline under the Fiscal Responsibility and Budget
Management (FRBM) framework, the fiscal deficit stood at 4.6% of GDP in 2019–
20, signalling stress on revenue mobilization even before the pandemic's arrival.
The outbreak of COVID-19 during 2020–21 led to an unprecedented shift in the
expenditure pattern, with immediate emphasis placed on healthcare, relief, and social
protection measures. Total government expenditure rose sharply to ₹35.1 lakh crore
during this period. Revenue expenditure expanded significantly as the government

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 rolled out emergency support programs, including the Pradhan Mantri Garib Kalyan
Yojana (PMGKY) for free food distribution to over 80 crore individuals, direct cash
transfers to women, farmers, and other vulnerable sections, and a major expansion of
the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)
scheme with an allocation of ₹1.11 lakh crore. Health sector spending also increased
to finance testing, quarantine infrastructure, and the nationwide vaccination program.
Although capital expenditure continued, its pace slowed temporarily as priority
shifted towards immediate consumption and welfare needs. The fiscal deficit surged
to 9.2% of GDP, reflecting both increased spending and a sharp contraction in
revenue due to the economic slowdown.
Following the pandemic, in 2021–22 and beyond, the government's expenditure
priorities gradually transitioned towards supporting economic recovery and building
long-term resilience. In 2021–22, total government expenditure was recorded at
₹37.94 lakh crore. There was a conscious effort to significantly boost capital
expenditure, which rose by 34.5% compared to the previous year, reaching ₹5.5 lakh
crore. Major investments were directed towards sectors such as roads, railways, and
housing, aiming to generate employment and crowd-in private investment.
Healthcare continued to receive attention, with the launch of the PM Atmanirbhar
Swasth Bharat Yojana with an outlay exceeding ₹64,000 crore, aimed at
strengthening public health infrastructure. Revenue expenditure growth was
gradually moderated, and efforts were undertaken to better target welfare schemes
and rationalize subsidies. In the Union Budget for 2022–23, the government
increased capital expenditure further to ₹7.5 lakh crore, demonstrating a clear shift
towards a growth-driven fiscal strategy. While the fiscal deficit remained elevated at
around 6.7% of GDP in 2021–22, steps were initiated to bring it down progressively
in the medium term, signalling a return to fiscal consolidation.
Overall, India's government expenditure pattern underwent a major transformation in
response to the COVID-19 crisis. The pre-pandemic period was characterized by a
focus on development and welfare within fiscal constraints. During the pandemic,
emergency measures necessitated a large expansion of welfare and health-related
spending. In the aftermath, the emphasis shifted towards growth-oriented investment
and infrastructure development, balancing the immediate need for recovery with the
medium-term goal of fiscal sustainability.

- 3 ,- : 3, ,3 . -:, :/,
PANDEMIC

Over the last two years, fiscal policy has remained a significant tool for addressing
the economic fallout of the pandemic. Government of India has adopted a calibrated
fiscal policy approach to the pandemic, which had the flexibility of adapting to an
evolving situation in order to support the vulnerable sections of society/firms and

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18
enable a resilient recovery. India’s unique agile policy response differed from the
waterfall strategy1 of introducing front-loaded stimulus packages, adopted by most
other countries in 2020. Such an adaptive approach has now been widely accepted in
the policy circles (IMF Fiscal Monitor October 2021). The agile fiscal policy
response adopted by Government of India encompassed a change in mix of the
stimulus measures amidst an uncertain evolution of the pandemic situation. In the
initial phase of the pandemic, the fiscal policy focused on building safety-nets for the
poor and vulnerable sections of society to hedge against the worst-case outcomes.
Stimulus measures such as direct benefit transfers to the vulnerable sections,
emergency credit to the small businesses, and the world’s largest food subsidy
programme targeting 80.96 crore beneficiaries enabled the creation of safety-nets, by
ensuring that the essentials are taken care of. This was followed by a series of
stimulus packages spread throughout the year 2020-21, driven by a Bayesian
updating of information as the situation evolved. With the restoration of economic
activities, the fiscal response focused on stimulating demand in the economy. During
this phase of economic recovery, the stimulus mix included investment boosting
measures like Production Linked Incentives (PLI), steps to encourage investment in
infrastructure sector and enhancing capital expenditure by the Central and state
Governments

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 I E E, . D E
Figure 3- Trends in quarterly capital expenditure

H H Q H Q H IH H O O Q E C E C
a Q H Q O I H Q Q O E C I OI O T OH OT I TO
FD HO I T H Q H OI HQ TQ O E C HO E C O IH O H
Q Q TH H O Q O O HQ O O H Q H I O O
QH Q H T Q Q H O IH H O Q C I O
O O YQ I O O I Q O I O Q O Q I O I I HO O HQ I
O

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 I / E D IM P

Figure 4 – Changing mix of stimulus announcements 2020-22

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 CHAPTER -4

TO EXAMINE CHANGES IN INDIA’S IMPORT- EXPORT PATTERNS DURING THE

COVID-19 PANDEMIC

4.1 INTRODUCTION

India's foreign trade has seen numerous modifications as a result of COVID-19. The
sickness has a significant negative influence on India's exports. The rationale is
straightforward: Covid had a significant negative impact on industries including
manufacturing and service. Even the service industry was not as severely hampered by the
pandemic as the manufacturing sector was. All the manufacturing facilities were closed,
which had an effect on India's foreign trade and ultimately the entire economy. The
COVID-19 report's greatest exposure to Indian industries is in the textile, apparel, and
transportation industries, which together account for around 18% of India's overall exports.
The top 3 exports from India, which account for more than 40% of its total exports—fuels,
chemicals, and stone and glass—show moderate vulnerability. The lowest exposure risks
are seen in industries less reliant on export markets, such as those producing vegetables,
polymers and rubber, livestock, food goods, etc. India is less vulnerable because of its
limited reliance on intermediate imports from China. Furthermore, the low price of crude
oil, India's largest import, will take any outside shock. The percentage of India's trade
compared to its GDP is 43%, showing a modestly open economy in comparison to other
BRICS countries. The economic impact is primarily caused by demand shocks rather than
supply shocks from countries strongly affected by COVID-19 (Brazil, Russia, India, China
and South, Africa). China has a sizable deficit in food trade whereas India has a surplus.
Additionally, there aren't many COVID-19 cases in India. However, compared to the other
members of the group, India may experience more pandemic-related human casualties
because of its high population density and limited access to healthcare services, as seen by
the low population of doctors. With fewer instances, a surplus in food commerce, and lower
population density than other BRICS nations, South Africa appears to be in a stronger
situation.

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 Figure 6- Decrease in the ratio of imports to exports (2020 vs 2019)

Figure 7- Export and Import losses

Source: EPRA International Journal of Environmental Economics

4.2 INDIA’S TRADE PERFORMANCE DURING COVID-19

India’s overall (merchandise and services) export was US$ 394.96 billion during 2020-21
(April-January) as compared to US$ 443.24 billion during 2019-20 (April-January), i.e. a
negative growth of 10.89%. During 2020-21 (April-January), India’s overall import was
US$ 400.84 billion as compared to US$ 514.57 billion during 2019-20 (April-January), i.e.
a negative growth of 22.10%. India’s overall trade deficit was US$ 5.88 billion during
2020-21 (April-January) as compared to US$ 71.33 billion in 2019-20 (April-January), with
a high reduction of trade deficit of US$ 65.45 billion.

In order to increase the production and exports of Pharma, Agriculture, Automobile, and
Defence items and to re-energize India’s trade performance, some of the key steps taken
are:
1. A comprehensive “Agriculture Export Policy” to provide an impetus to agricultural
exports is under implementation.
2. Product specific Export Promotion Forums (EPF) for eight high potential agriculture-
products i.e. Grapes, Mango, Banana, Onion, Rice, Nutri-Cereals, Pomegranate,
Floriculture and Plant material have been created to promote export of identified
products in a focused manner.
3. Subsidy is provided under Operation Greens scheme for transportation of fruits and
vegetable through Kisan Rail.
4. Trade Infrastructure for Export Scheme (TIES), Market Access Initiatives (MAI)
Scheme and Transport and Marketing Assistance (TMA) have been launched to
promote trade infrastructure and marketing.
5. Assistance to the exporters of agricultural products is made available under the export
promotion schemes of Agricultural and Processed Food Products Export
Development Authority (APEDA), Marine Products Export Development Authority

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 (MPEDA), Tobacco Board, Tea Board, Coffee Board, Rubber Board and Spices
Board.
6. Production-Linked Incentive (PLI) Scheme for 13 sectors- 3 sectors in March, 2020
and 10 sectors in November, 2020 with an outlay of Rs 1.97 lakh crore has been
launched to provide a major boost to manufacturing. These sectors are (i)
Automobiles and Auto Components, (ii) Pharmaceuticals Drugs, (iii) Specialty Steel,
(iv) Telecom & Networking Products, (v) Electronic/Technology Products, (vi) White
Goods (ACs and LEDs), (vii) Food Products, (viii) Textile Products: MMF segment
and technical textiles, (ix) High efficiency solar PV modules, and (x) Advanced
Chemistry Cell (ACC) Battery (xi) Medical devices (xii) Large scale electronics
manufacturing including mobile phones (xiii) Critical Key Starting Materials
(KSMs) /Drug intermediaries and Active Pharmaceutical Ingredient (API).
7. Export authorisation procedures have been streamlined through introduction of online
procedures and portals for promotion of exports of Indian defence products.
8. The ‘Make’ procedure of capital procurement has been simplified. There is a provision
for funding of 90% of development cost by the Government to Indian industry under
Make-I category. In addition, there are specific reservations for MSMEs under the
‘Make’ procedure. Separate procedure for ‘Make-II’ category (Industry funded) has
been notified under Defence Procurement Procedure 2016 to encourage indigenous
development and manufacture of defence equipment.
9. Interest Equalization Scheme on pre and post shipment rupee export credit has also
been extended by one year i.e. up to 31-3-2021.
10. Promoting districts as export hubs by identifying products with export potential in
each district, addressing bottlenecks for exporting these products and supporting local
exporters/manufacturers to generate employment in the district.

4.3POLICY RESPONSE

1) Temporary reduction of the Integrated Good and Services Taxes "IGST" on oxygen
concentrator, imported for personal use (HS 9804), due to the COVID-19 pandemic.
2) Temporary exemption of goods from Integrated Good and Services Taxes "IGST"
levied thereon at the time of import subject to conditions as follows: (i) when such
goods are imported into India free of cost for the purpose of COVID Relief by a
state government, or any entity, relief agency, or statutory body empowered in this
regard by any state government; (ii) said goods are received from abroad for free
distribution in India for the purpose of COVID relief.
3) Amendments introduced to the import policy of Iron and Steel and incorporation of
policy condition, resulting in an extension of validity to 135 days to automatic
registration number generated under the Steel Import Monitoring System "SIMS"
until 31 March 2020, due to the COVID-19 pandemic.
4) Amendments introduced to Foreign Trade Policy 2015-2020 "export of cut and
polished diamonds with re-import facility at zero duty") resulting in enhancement of
the time limit for re-import facility with zero duty from 3 months to 6 months for
case where re-import period is expiring between 1 February 2020 to 31 July 2020,
due to the COVID-19 pandemic.
5) Operationalization of DGFT "COVID-19 Helpdesk" for International Trade-related
Issues. The Department of Commerce have undertaken to monitor the status of
export and imports and difficulties being faced by trade stakeholders in view of the

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surge of COVID-19 cases. DGFT has accordingly operationalized a "COVID-19
Helpdesk" to support and seek suitable resolutions to issues arising in respect of
International Trade. It would look into issues relating to Department of
Commerce/DGFT, Import and Export Licensing Issues, Customs clearance delays
and complexities arising thereon, Import/Export documentation issues, Banking
matters. The Helpdesk would also collect and collate trade-related issues concerning
other Ministries/Departments/Agencies of Central Government and State
Governments and will co-ordinate to seek their support and provide possible
resolutions

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 CHAPTER : 5

CONCLUSION AND SUGGESTIONS

5.1 : CONCLUSION
The COVID-19 pandemic represented one of the most profound economic shocks in
independent India's history, altering the nation’s growth trajectory and redefining
the contours of public finance and trade dynamics. The pre-pandemic period was
already witnessing moderate signs of a slowdown, with GDP growth tapering due to
structural weaknesses such as sluggish private investment, stress in the banking
sector, and global uncertainties. However, the outbreak of COVID-19 in early 2020
accelerated this deceleration into a full-scale contraction, with GDP shrinking by
7.3% in 2020–21. The Indian economy, for the first time in several decades, faced
simultaneous supply and demand shocks, severely impacting both production and
consumption activities across sectors. Public finance came under enormous
pressure during this period. Government revenues plummeted due to lower tax
collections, falling corporate earnings, and decreased consumption. On the other
hand, expenditure obligations rose sharply as the government undertook large-
scale fiscal interventions to protect lives and livelihoods. Relief measures included
free food distribution, direct cash transfers, healthcare spending, and credit
support to vulnerable sectors. Consequently, the fiscal deficit widened
dramatically to 9.2% of GDP, breaching disruptions in supply chains and labor
shortages, though certain subsectors such as pharmaceuticals, consumer
durables, and electronics showed resilience. Agriculture stood out as a rare bright
spot, posting positive growth owing to a good monsoon, sustained rural demand
fiscal responsibility targets. Capital expenditure, crucial for long-term economic
growth, initially slowed but later regained focus as part of the recovery strategy.
Managing the trade-off between providing immediate economic relief and
maintaining long-term fiscal sustainability became a central challenge for
policymakers. Sector-wise, the impact of the pandemic was deeply uneven. The
services sector, particularly industries dependent on physical mobility such as
hospitality, tourism, aviation, and retail, bore the brunt of lockdown measures and
consumer fear. Manufacturing activity declined sharply initially due to, and
minimal disruption in farm activities. The pandemic also accelerated structural
transformations within sectors, most notably the rapid adoption of digital

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India’s external sector witnessed significant volatility during the pandemic period.
Merchandise exports contracted sharply in the initial months due to global trade
disruptions but later recovered as international demand picked up, particularly for
pharmaceuticals, agricultural products, and engineering goods. Imports of crude
oil and non-essential items fell initially, improving the current account balance
temporarily. However, vulnerabilities in supply chains and dependence on limited
trading partners exposed the need for a more diversified and resilient trade strategy
going forward. As the economy emerged from the immediate crisis, growth
rebounded strongly in 2021–22, with GDP expanding by 9.1%, aided by policy
support, vaccine rollout, and reopening of economic activities. Nonetheless, the
recovery has been K-shaped — benefiting large businesses and formal sectors
disproportionately while smaller firms and informal workers continue to struggle.
Fiscal management remains complex, with the need to balance growth support
with debt sustainability. Rising inflationary pressures, global geopolitical tensions,
and financial market volatility add further layers of uncertainty to the recovery
path. The COVID-19 crisis, despite its devastating consequences, offers critical
lessons for the future. It has underscored the importance of building robust
healthcare infrastructure, strengthening social protection systems, and creating
fiscal buffers for emergencies. Strategic public investments, especially in
infrastructure, digitalization, and green technologies, can drive sustainable growth.
Efforts must also focus on enhancing ease of doing business, encouraging
innovation, improving credit access for MSMEs, and upskilling the workforce to
adapt to the changing nature of the economy. Equally important is the need to
ensure that the recovery is inclusive, bridging rural-urban, formal-informal, and
gender-based disparities that widened during the pandemic. In conclusion, the
COVID-19 pandemic has fundamentally reshaped India's economic landscape. It
interrupted the growth momentum, tested the resilience of public finances, and
exposed critical weaknesses in the country's economic fabric. However, it also
opened a window of opportunity to implement bold reforms and strengthen
institutional capacities. As India moves forward, the key lies in leveraging the hard-
earned lessons of the pandemic period to build a more resilient, equitable, and
dynamic economy capable of navigating future challenges and sustaining high
growth in a rapidly changing global environment.

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5.2 : SUGGESTIONS

Strengthen Public Health Investment:

To mitigate the long-term economic impact of future crises, the
government should substantially increase public health expenditure,
focusing on infrastructure, pandemic preparedness, and rural healthcare
delivery systems.

Enhance Fiscal Space and Targeted Spending:

A comprehensive strategy to widen the tax base, improve compliance, and
rationalize subsidies can help strengthen public finances. Targeted welfare
spending, rather than broadbased transfers, will ensure fiscal efficiency
and better social outcomes.

Accelerate Infrastructure-Led Growth:

Sustained emphasis on capital expenditure, particularly in transport,
energy, and digital sectors, is critical to drive long-term GDP growth, crowd-
in private investment, and create employment opportunities across diverse
sectors.

Diversify Export Markets and Supply Chains:

India should pursue policies to diversify its export base and reduce
dependency on a few markets. Enhancing trade facilitation, negotiating
new trade agreements, and supporting small exporters can make India's
external sector more resilient.

Promote Sectoral Resilience and Innovation:

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 3 . /

1. Ministry of Finance, Government of India

Economic Survey 2020–21
(For data on GDP growth, sectoral trends, public finance, and government response to
COVID-19.)
2. Ministry of Finance, Government of India
Union Budget 2021–22 and 2022–23 Documents
(For detailed information on government expenditure, fiscal deficit, and revenue
trends during and after the pandemic.)
3. NITI Aayog
Strategy for New India @75 and various COVID-19 policy papers
(For policy reforms and structural strategies post-COVID.)
4. Ministry of Commerce and Industry
Export-Import Data Bank and Annual Reports
(For trade trends, export-import performance before, during, and after COVID-19.)
5. National Statistical Office (NSO)
GDP Estimates: Quarterly and Annual Reports (2020–2023)
(For official GDP data, sector-wise growth rates, and national accounts statistics.)
6. Ministry of Health and Family Welfare
COVID-19 Updates and Health Infrastructure Reports
(For information on healthcare spending and pandemic management expenditures.)
7. Controller General of Accounts (CGA)
Monthly Accounts Reports 2020–21, 2021–22
(For real-time data on government revenue collection and expenditure.)
8. Department of Economic Affairs (DEA)
Monthly Economic Reviews 2020–22
(For continuous tracking of economic trends, stimulus impacts, and fiscal health
during COVID.)

Asian Development Bank (ADB)

9. "Asian Development Outlook (ADO) 2021 and 2022 — India Chapter"

(For sector-specific economic impact and recovery patterns.)

Brookings Institution — India Centre

10. Research on COVID-19’s impact on Indian economy

(Analytical papers on recovery strategies, fiscal challenges.)
11. Dev and Sengupta( pandemic’s impact on the informal sector) 2020
12. Chakraborty and Thomas (2020)
13. KPMG India Report (2020)

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