COVID-19 affected the entire world making no difference between the rich and the poor, between the strong and poor nations. Wealth could not avoid the catastrophe and could not also guarantee a good life.

Well laid rules of economics were tested. The well-established health care systems of advanced nations were also severely tested and found wanting. In all, the world order was severely tested to the core. No country howsoever mighty and wealthy was spared from its debilitating effects.


The onset and spread of the disease were so severe that many of the countries went into forced lock down of the economic activity, in order to prevent the spread of the fatal disease. The forced lock down affected industries across board and resulted in severe shortfall of revenue, both to the industry and the Governments. Employments were lost, salaries were cut, business was lost along with mounting interest on borrowed capital and the absence of a timeline for the resumption of economic activity.

It made for a very alarming and bleak future. The economic activity throughout the world was severely affected. In addition to this, Governments had to prepare their economy on a scale of war to provide healthcare which cost them a bomb.

India, being a developing country, was also severely tested. Industrial production came to a standstill and our healthcare system was also stretched but due to the pragmatic policies of the Central Government headed by Honorable Prime Minister Narendra Modi, the catastrophic effects of the rampaging pandemic was arrested to a great deal. We should not lose sight of the fact of our huge population and not so developed healthcare system prevalent. Our economy was also severely affected.


As was the norm throughout the world, Indian Economy also bore the brunt of the pandemic. There was a very drastic shortfall in industrial production, retail trade, loss of employment, realty sector saw a downward spiral. Tourism sector was also severely affected. There was loss of employment, reduction in salary, thereby severely affecting their loan repayments, which had a bearing on banking industry also. This is borne out by the following statistics:

  • GST Collections
Month 2020 (cr) 2019 (cr)
April 32,294 1,13,865
May 62,009 1,00,289
June 90,917 99,939
July 87,422 1,02083
August 86,449 98,202
September 95,480 91,916
  • Advance Income Tax
Quarter 2020 (cr) 2019 (cr)
September 1,21,153 1,66,648
June 8,466 39,296
Sub Total 1,29,619 2,05,944
September 26,190 46,241
June 3,248 9,512
Sub Total 29,438 55,753
Total Advance Tax Collected
September 1,47,343 2,12,889
June 11,713 48,808
Grand Total  1,59,056   2,61,697
  • Employment Generation: 
Unemployment Rate 2020 (%) 2019 (%)
August 8.35 8.19
July 7.40 7.34
June 10.18 7.87
May 21.73 7.03
April 23.52 7.32
  • Index of Industrial Production:
Month YOY (%)
April -57.3
May -33.4
June -16.5
July -10.8
August -7.4

source: mospi.in

The effect of the pandemic was visible in all the parameters shown above.


The Central Government was seized of the damage caused by the pandemic and brought forth various stimulus measures to kickstart the economy and to help all sections of population. Various measures brough by the government were as under:

 Overall Stimulus Provided by

 Aatmanirbhar Bharat Package 

  Particulars (Rs. Cr)
1 Part 1 5,94,550
2 Part 2 3,10,000
3 Part 3 1,50,000
4 Part 4 and 5 48,100
Sub Total 11,02,650
5 Earlier Measures incl PMGKP 1,92,800
6 RBI Measures (Actual) 8,01,603
Sub Total 9,94,403
Grand Total 20,97,053

 Details of support given in Part-1 

SN Particulars (Rs.Cr)
1 Emergency W/C Facility for Businesses, Incl MSMEs 3,00,000
2 Subordinate Debt for Stressed MSMEs 20,000
3 Fund of Funds for MSMEs 50,000
4 EPF support for Busines & Workers 2,800
5 Reduction in EPF rates 6,750
6 Special Liquidity Scheme for NBFC/HFC/MFIs 30,000
7 Partial Credit Guarantee Scheme 2.0 for Liabilities of NBFCs/MFIs 45,000
8 Liquidity injection for DISCOMs 90,000
9 Reduction in TDS/TCS rates 50,000
Total 5,94,550


  Details of support extended in Part-2.

SN   (Rs. Cr)
1 Free Food Grain Supply to Migrant workers for 2 months 3,500
2 Interest Subvention for MUDRA Shishu Loans 1,500
3 Special Credit Facility to Street Vendors 5,000
4 Housing CLSS-MIG 70,000
5 Additional Emergency Working Capital through NABARD 30,000
6 Additional Credit through KCC 2,00,000
  Total 3,10,000

Details of support extended in Part-3

SN Particulars (Rs. Cr)
1 Food Micro Enterprises 10,000
2 Pradhan Mantri Matsya Sampada Yojana 20,000
3 TOP to TOTAL: Operation Greens 500
4 Agri Infrastructure Fund 1,00,000
5 Animal Husbandry Infrastructure Development Fund 15,000
6 Promotion of Herbal Cultivation 4,000
7 Beekeeping Initiative 500
  Total 1,50,000

Details of support extended in Part-4 & Part-5

SN Particulars (Rs. Cr)
1 Viability Gap Funding 8,100
2 Additional MGNEREGS allocation 40,000
  Total 48,100

Support extended in 2nd Stimulus package.

SN Particulars (Rs. Cr)
1 Boosts for Aatmanirbhar Manufacturing – Production Linked Incentives 1,45,980
2 Housing for All – PM Awas Yojana – Urban 18,000
3 National Investment and Infrastructure Fund 6,000
4 Aatmanirbhar Bharat Rozgar Yojana 6,000
5 Fertilizer Subsidy 65,000
6 Domestic Defence Equipment and Industrial Infrastructure 10,200
7 Boost for Rural Employment 10,000
8 R&D Grand for COVID Suraksha – Indian Vaccine development 900
9 Boost for Project Exports – Support for EXIM Bank 3,000
  Sub Total 2,65,080

The stimulus provided by the Central Government helped a great deal in kick starting an economy which was on a downward spiral because of the effects of Corona Pandemic. It covered all sections of the society.


Indian economy is an economy blessed by God in various ways. Since India is a spiritual country, many festivals mark its calendar throughout the year. Starting from Sankranti, Ayudha pooja, Navaratri, Holi, Deepavali, Christmas, Eid, Bakrid and the like dot its calendar. These festivals push demand for consumer goods ranging from clothes, jewellery, gems, realty, cars, and consumer goods.

During to the lock down measures being gradually withdrawn, the last quarter of the year saw record sales generated from all these sectors put together, which contributed in a big way in the upsurge of Income Tax and GST collections. The sales were in a big way, driven by the pent-up demand further lubricated by festivals. This ensures all year-round demand for consumer goods which drives our economy compared to other economies.

Even the software industry and defence industry posted good gains. Since the lock down was progressively withdrawn the movement of men and material started which contributed in a big way in collection of VAT on petroleum products which helped in Government funding many of its people friendly schemes. Auto, cement and steel sector drove the growth.

The growth was also influenced by the major infra push given by the Central Government.

Some of the key parameters are given below: 

1. The industrial sector as per Index of Industrial Production (IIP) registered a growth of 0.6 per cent in 2019-20 (April-November) as compared to 5.0 % during 2018-19 (April-November).

2. Fertilizer sector achieved a growth of 4.0 % during 2019-20 (April-November) as compared to (-) 1.3 per cent during 2018-19 (April-November).

3. Steel sector achieved a growth of 5.2 % during 2019-20 (April-November) as compared to 3.6 % during 2018-19 (April-4. Total telephone connections in India touched 119.43 crore as on September 30, 2019.

4. The installed capacity of power generation has increased to 3,64,960 MW as on October 31, 2019 from 3,56,100 MW as on March 31, 2019.

5. Report of the Task Force on National Infrastructure Pipeline released on 31.12.2019 has projected total infrastructure investment of Rs. 102 lakh crores during the period FY 2020 to 2025 in India.

Services Sector

  • Increasing significance of services sector in the Indian economy:
  • About 55 % of the total size of the economy and GVA growth.
  • Two-thirds of total FDI inflows into India.
  • About 38 per cent of total exports.
  • More than 50 % of GVA in 15 out of the 33 states and UTs.
  • Gross Value-Added growth of the services sector moderated in 2019-20 as suggested by various high-frequency indicators and sectoral data such as air passenger traffic, port and shipping freight traffic, bank credit etc.

8. On the bright side, FDI into services sector has witnessed a recovery in early 2019-20 (Source Press Information Bureau handout).

9. The turnaround is also backed by the following figures of taxes collected:

  • GST Collections:
Month 2020 (in Cr) 2019 (in Cr)
December 1,15,174 1,03,184
November 1,04,963 1,03,492
October 1,05,155 95,380
  • Advance Income Tax
December (Q3) 2020 2019
Corporate 1,09,506 73,126
Others 31,054 32,910
Total 1,40,560 1,06,036
  • Employment Generation: 
Unemployment rate 2020 2019
November 6.51 7.23
October 6.98 8.10
September 6.67 7.14
  • Index of Industrial Production: 
Month 2020
September 0.2
October 3.6

source: mospi.in

  • UPI payment disbursal from Banks 
Month 2020 (in Crs) 2019 (in Crs)
December 22,58,304.0 19,42,230.7
November 22,18,252.5 17,34,651.2
October 22,35,389.0 18,60,786.3

Source: npci.org.in

  • YOY Growth (%) 
YOY Growth (%) Apr-20 Jun-20 Sep-20 Dec-20
Railway-Tonnage Movement -35.2 -7.8 15.3 8.6
Power Demand -24 -10.5 4.6 5
Avg. E Waybill -83.6 -12.7 9.6 13.2
Manufacturing PMI 27.4 47.2 56.8 56.2
Service PMI 5.4 33.7 49.8 53.7
Gross GST Collections -71.6 -9 3.9 11.6
Unemployment 25 11.7 8.5 8.8
PV Registration -90.2 -26.3 31.9 34.6
2W Registration -75.9 -37.8 -11 14.5
Tractor Registration -84.2 6.9 88.1 42.8

Source: HDFC MF Yearbook

  • Start-ups Registrations: 
  2020 (till Nov) 2019
Registered during the Year 40,759 24,927
  •  Car Sales: 
Period 2020 2019
December 2,76,412 2,34,805
November 2,91,001 2,79,365
October 3,33,660 2,84,039

source: autopandiz.com

  • Two-Wheeler Sales: 
Period 2020 2019
December 10,99,651 10,50,038
November 16,00,685 14,10,939
October 20,53,814 17,57,264

source: autopandiz.com 

  • India’s manufacturing PMI stood at 58.9 in October 2020 from 56.8 in September. Also, companies have started to spend more on hiring and anticipate good growth in prospects. As per the latest survey, capacity utilisation in India’s manufacturing sector stood at 68.9% in Q3FY20.
Manufacturing YOY (%)
Basic Metals 10.8
Intermediate Goods 8.8
Food Products 2.7
Tobacco Products 2.9
  • The electronic goods industry is one of the fastest growing industries and is expected to be worth Rs. 27.96 lakh crore (US$ 400 billion) by 2020. The Government is working on an export-oriented policy for electronic products. The idea behind this policy is to promote greater export of electronics and drive larger investments by setting up port-based electronic manufacturing clusters.
  • The Government of India has been supportive towards industry’s growth. It has set up Electronic Hardware Technology Parks (EHTPs), Special Economic Zones (SEZs) and has brought about a favourable climate for Foreign Direct Investment (FDI). The Government has also increased liberalisation and has relaxed tariffs to promote growth in the sector. In addition, it has given the nod to Modified Special Incentive Package Scheme (MSIPS) under which the Central Government will be offering up to Rs. 11,881 crores (US$ 1.7 billion) in benefits to the electronics sector in the next five years. Under the scheme, a subsidy for investment in capital expenditure is provided to the extent of 20% of investment in SEZs and 25% of investment in non-SEZs.

By reducing the rate of Income Tax and the rates of TDS more money was put in the hands of people in order to help them spend more and to use it to their necessities.

F. Summary.

A study of the various parameters stated above leads us to the conclusion that the  Indian economy is on a resurgent mode and happy times are ahead. The bad times of the pandemic may be behind us as the economy surges ahead in the immediate future. All it needs is a bit of help by a friendly budget and pragmatic reduction of rates in GST. Both the retail trade and the heavy industries segment are set for a good time led by spending on high value items in defence industry. 

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  1. Hari B G says:

    The article has come out very well, the figures provided is already in Public Domain, here what’s being suggested is that the solution has to be provided by the author, kindly suggest to the finance ministry some inputs regarding the same

  2. Padmanabhan S says:

    Very informative article with clear statistics.
    Impact on India’s economy and remedial measures taken is explained very well.
    All the best for your valuable article sir

  3. Narayana Sharma says:

    The article has come very well with supporting statistics and indication of economic revivals. Hope the coming budget will be supporting further to this recovery. 🙏👍

  4. Krishnamachar Srinivasa says:

    Timely article. Factors threatening economy are many and it is not easy to bring back to original state. Yet, measures adopted are laudable.

  5. S. R Rangarajan says:

    Excellent article. The first 7 months of FY 20-21 was really frightening. Resurgence is well on cards. Indian economy is always better than others.

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August 2022