The whole world is under pressure to fight with the worldwide big problem called COVID-19.
Under the situation, Prime Minister Narender Modi take a difficult step and announced a 21 days lockdown in India from 25th March to stop the spreading pandemic of corona-virus.
The corona-virus affect economy and Indian Finance Minister Nirmala Sitharam has already declared a COVID-19 relief package of ₹1.7 lakh crore and may be planning more to support the Indian economy in the global recession. According to Fitch Solutions to the announcement encouragement package to the economy due to COVID-19, the Indian Government’s fiscal deficit may shoot up to 6.2% of GDP from 3.5% in the current year.
The lockdown policies being implemented to control the spread of the virus are having rapid and dramatic effects on daily economic activity. Nationwide lockdowns look to be reducing daily activity by about 20% from normal levels.
N R Bhanumurthy (Professor at National Institute of Public Finance and Policy) said in his an interview that, “With the current lockdown, the current situation in the Indian economy, which was already in slowdown phase for over six quarters, has actually aggravated further and assuming that the situation could improve in a quarter, in 2020-21, the Indian economy could register the lowest growth that was experienced in the post-reform period (since 1991). This is despite strong monetary and fiscal stimulus measures introduced since February 2020.”
Revenue in the Indian economy will come under pressure with discontinuing the businesses due to Lockdown and Govt. of India may look towards additional borrowing to funds its expenses. Then the Indian Ministry of Finance decided to reduce the load from its borrowing program by issuing Govt, Securities worth ₹ 4.879 trillion or 62.56% of its gross borrowing target of ₹ 7.8 trillion for FY 2020-21 in the first half ending 30th September 2020.
Aditi Nayar (Principal economist at ICRA Ltd) said that “The loss of economic activity is expected to dampen tax collections in first quarter FY 2020-21, which would constrain the cash flows of the central and state governments. Additionally, expenditure may rise sharply in the first half of FY 2020-21, especially if additional stimulus programs are provided to dull the impact of the ongoing crisis on livelihoods and economic activity”.