Whither India’s Economy Post-COVID-19?

India’s economy was weak in 2019 but appeared to be near a trough. A protracted slide in growth had continued since 2016. The continued challenges in implementation of the 2017 national Goods and Services Tax and credit stresses in the domestic financial sector beginning in 2018 weighed on growth and sentiment. Sectors such as construction, housing, and autos reflected extremely low levels of activity. The RBI eased monetary policy and pledged to stabilize the financial sector, and the government introduced a large corporate tax cut to attract manufacturing activity, among other measures. While we did not believe that any of these measures represented a forceful cyclical policy stimulus that would result in a sharp rebound, we thought that, together, they would help put a floor under the deceleration in growth, and combined with better external conditions, we would see India’s growth climbing back toward its long-term trend. However, just as the Indian economy was starting to look up in the beginning of 2020, the rising tide gave way to the COVID-19 shock. Against this backdrop, this paper presents a synthesis of our research on the macroeconomic and fiscal implications of the COVID-19 crisis for India and lays out the challenges in setting and implementing policy