Amid a second severe COVID wave, the Finance Ministry feels the economic impact may not be as severe in 2020. Our GDP may be reduced by one percent as the lockdown is being implemented in some states and it is not insolvent to India.
According to the Finance Ministry, based on its economic review for April 2021, the second wave of COVID 2019 continues and is a downside risk to economic activity in the first quarter (i.e. April – June 2021) of FY 2020-21. . This is likely to have a muted economic impact compared to the COVID-19 first version in 2020. Many rating companies and other agencies have also echoed similar views and as a result, GDP estimates for 2022 are being downgraded.
The recently discontinued indirect tax collections (Customs, Central Excise and GST) in FY 2020-21 resulted in 8.2% higher than the Revised Estimates (RE) and 12.3% higher than the 2019-20 collections. -21 was an unusual year, this collection Infact is encouraging. Not only this, imports grew by 166% and 7% respectively in 2020 and 2019. Similarly, it increased by 197% and 16% in 2020 and 2019 respectively. While these figures may sound music-to-ear, we cannot rule out the possibility of loss of life, businesses and economy in the second phase of COVID and there is a possibility of a third wave in the offing. Anyone can guess how many more waves are in store.
Although the government’s fiscal position has improved with macroeconomic activities in October, 2020– March, 2021, which is also reflected in tax collections, since April, 2021, the second wave of COVID has resulted in the country partially The lockout has occurred and has resulted in disaster. Restrictions on economic activities. With the rapid proliferation of COVIDs, many states have imposed partial or total lockdowns or curfews on all businesses and social activities. At the same time, high health risks have led to challenges with increasing health care infrastructure costs as well as a large number of fatalities.
The two silver linings are an Indian experience of working and learning with COVID with the introduction of the largest vaccination project ever undertaken. Results may show a few weeks down the line.