The effect of COVID-19 pandemic on economic growth and public debt: an analysis of India and the global economy
Journal of Economic and Administrative Sciences
ISSN: 1026-4116
Article publication date: 15 March 2022
Abstract
Purpose
The study attempts to examine the effect of the COVID-19 pandemic on the economic growth and public debt of the Indian economy. The authors also attempt to make quarterly projections of economic growth and external debt (ED) for the next five years. The objective is to understand how much time the economy takes to recover and at what pace. Consequently, this study elucidates the composition of debt after the crisis in the next five years.
Design/methodology/approach
To predict India's gross domestic product (GDP) and ED for the next five years, the authors used an auto-regressive integrated moving average (ARIMA) model. This model was built under a Box–Jenkins methodology (Box and Jenkins, 1976) and was subjected to an augmented Dickey–Fuller (ADF) test to check the stationarity of the data. The methodology includes three main steps to estimate and forecast the model: identification, estimation, and diagnostic and forecasting.
Findings
The study finds that the outbreak of the COVID-19 pandemic has significant implications for economic growth and public debt. The economy faced contraction in the first quarter of the year 2020 due to the suspension of economic activities and still struggling with the negative values of GDP. The forecasting results reveal that ED will continue to grow to meet the increasing health expenditure needs, and GDP will also bounce back slowly after the end of the year 2021. It has been noticed that the recurrent crisis derails the developing economies from the path of sustainable development to a prolonged economic slump with mounting public debt.
Originality/value
The study examines the impact of the COVID-19 pandemic on economic growth and public debt with particular reference to India. To the best of the authors’ knowledge, this is the first time the quarterly projections for GDP and ED have been made after the COVID-19 crisis.
Keywords
Acknowledgements
The authors are extremely grateful to the anonymous reviewers for their useful comments and suggestions.
Declaration of conflicting interests: The authors declare no potential conflicts of interest concerning the research and authorship of this article.
Funding: The authors received no financial support for the research and authorship of this article.
Citation
Pratibha, S. and Krishna, M. (2022), "The effect of COVID-19 pandemic on economic growth and public debt: an analysis of India and the global economy", Journal of Economic and Administrative Sciences, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JEAS-01-2022-0018
Publisher
:Emerald Publishing Limited
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