Economic impact of Covid 19 on the GDP of Indian states during FY2021 and their comparative analysis

Abstract

Through this project we aimed to investigate the effect of COVID outbreak in India on different state GSDPs. We also aimed to analyse which sectors of the three states under study was most affected during this period and the possible reasons for the same. The finds were also supposed to tell which sectors performed well so that states could focus more on them for the post COVID recovery and to achieve their GSDP growth plans. A major reason for the effect of COVID on the GSDP of the states was the implementation of the lockdowns, the timelines of these lockdowns and their extend, which was also looked in this project. Our final findings from the impact estimation of COVID 19 on the state GDPs shows a decrease of 10.94%, 11.3% and 7.46% for the states of Uttar Pradesh, Odisha and Karnataka respectively. We assessed that Primary sector was the least hit sector among the three sectors for all the states, mainly because this sector fulfils the basic needs of the public, and in time of crisis people first try to meet their basic needs and then go for the luxury. For the same reason Tertiary sector was the most hit sector in majority of the states. Specifically Manufacturing sector, Transportation sector, Real estate sector and Trade, repair and hotel sector were in the worst hit five sectors for all the three states. As for the lockdown implementations in different states, it was found that the state which imposed stricter restrictions at the start of the outbreak and hence delayed its Covid wave peak, that state experienced the least impact on its GDP. Other than this, we also conducted a comparative analysis see to if over the years, and not just during COVID, did the presence of different political parties at the state and central level had any effect on the growth of the state economics. We found out that if the political party which is ruling the state is also a part of the central government or is an alliance of the party at the centre, it led to lower growth of the economy at the state level. The possible reason for this would be that the importance of state level needs gets undervalued in front of the central level incentives for the ruling party, and hence the state won’t be getting the special attention needed. In all the finds from this report can be used by the states to investigate the possible growth drivers for the future, basis the best performing sectors and most effective schemes.