India’s Macroeconomic Response to Covid-19
Summary
The purpose of this work is to assess this macroeconomic response and record the details of both the monetary and fiscal packages created to fight the pandemic.
The author believes that chronicling India’s macroeconomic response will be a great service to future generations, who would like to refer to the great planning, diligence and hard work that was involved in protecting India from not only an economic catastrophe but also an unprecedented humanitarian disaster.
Excerpt
Table Of Contents
- Cover
- Title Page
- Copyright Page
- Dedication
- Contents
- Figures
- Tables
- Foreword
- Acknowledgements
- Chapter 1 Introduction
- Book Project Background
- Chapter 2 A Run-up to COVID-19 Economy: India’s Evolving Macroeconomic Landscape in the COVID Year 2020
- Chapter 3 India’s Fiscal Response to COVID-19
- Policy Question: Was the Fiscal Response Sufficient?
- Chapter 4 India’s Monetary Response to COVID-19
- Policy Question: Was the Monetary Response Adequate for a Crisis?
- Impetus for the Fiscal Side from RBI Dividends
- Chapter 5 Results of the Combined Macro Economic Response
- Policy Question: How Successful was the Fiscal-Monetary Coordination?
- Chapter 6 Assessing the Global Response and Impact
- Managing Rupee in a Volatile Global Environment
- The Reversal of Quantitative Easing: How it panned out?
- Yield Curve Evolution – Looking West Side!
- State of Global Monetary Policy: The Rates & Growth Dilemma
- Chapter 7 An Assessment of Global Central Bank Balance Sheets
- Structural & Composition Transformations of Balance Sheets
- BOJ Balance Sheet Assessment
- US Fed Liquidity Swap Arrangement: A Brief Discussion
- Chapter 8 Recommendations & Learnings
- Reimagining the Policy Implementation Framework of the RBI
- India’s Monetary Policy Stance in Accommodation & the Role of R*
- Structural Reforms in the Indian Monetary System & Future Readiness
- The LoLR Misnomer in the Indian Monetary System
- A Brief History of the LoLR Function in India
- A Brief History of the LoLR Function in the United States
- Lessons for the RBI & Learnings from the US Fed’s DW & CLFs post-COVID-19
- Government of India’s Policy Misses & Adverse Socio-Economic Cascading Effects
- Moral Hazard 1: Ignoring Household Stresses
- Moral Hazard 2:The Pandora’s Box Called Healthcare Inadequacies
- Moral Hazard 3: Ignoring the Corporate Debt Market Liquidity
- An excerpt from this author’s article: ‘How Regulations Failed Our Fixed Income Market’, published as HT Mint Opinion, in HT Mint, on 6th October 2021 (Karan Mehrishi, 2021)
- Moral Hazard 4: Lack of Credible Fiscal-Monetary Coordination
- Chapter 9 A Brief Discussion on Utilized Mathematical Models
- Kalman Filter & State Space Models
- A State Space Example
- A Simple State Space
- Understanding Model Workings
- Dynamic Factor Markov-Switching Models (DFMS)
- The Understanding
- The Workings
- Nowcasting Model in Practice for India (Predicting COVID-19 Impact on Output)
- Chapter 10 COVID as a Human Tragedy: A Kaleidoscope of Emotions of COVID Administrators (A Cross-Country Perspective)
- Chapter 11 Conclusion
- Chapter 12 Literature Review of Significant Work Done on the Subject
- Literature Review: A Brief Discussion of Important Works on the Subject
- Bibliography
- About the Author
- Index
Figures
Figure 1: The evolution of the fiscal deficit during the COVID years, and the estimated dynamic.
Figure 2: Depiction of the evolving monetary corridor during the COVID period.
Figure 3: Depicting the Repo Rate evolution during the COVID period.
Figure 4: Depicting the evolution of the annual RBI dividends accessed by the Government of India.
Figure 5: Depicting the GDP quarterly change (YoY) during the COVID period.
Figure 6: Sourced from RBI Data. Depicting the evolution of the Headline CPI during the COVID period.
Figure 7: Sourced from RBI Surveys Data. Depicting the Household Inflation Expectation, 3-month forward.
Figure 8: Sourced from RBI, NSDL Data. Depicting the evolution of yields of India 10 year-duration Government debt.
Figure 9: Sourced from RBI Data. Depicting the comparison of the yields of India’s 2-year and 10-year duration Government debt.
Figure 10: Depicting the US Temporal Liquidity evolution (compared to rates) during the COVID period.
Figure 11: Depicting the Euro System Temporal Liquidity evolution (compared to rates) during the COVID period.
Figure 12: Depicting the BOJ Temporal Liquidity evolution (compared to rates) during the COVID period.
Figure 13: Depicting the RBI Temporal Liquidity evolution (compared to rates) during the COVID period.
Figure 14: Depicting Central Bank Balance Sheet evolution during the COVID period.
Figure 15: Depicting the utilization of the Swap Lines during the COVID period.
Figure 16: Snapshot of Supply of Reserve Balances in the Indian Monetary System (see Note 8).
Figure 17: WACR Movement Volatility Within the LAF. Data Source: Macrobond; Chart: Karan Mehrishi.
Figure 18: Depicting the estimated non-averaged R* evolution as compared to the Real Repo Rate and CPI.
Figure 19: Depicting India’s evolving output gap during and after the pandemic.
Figure 20: Loss Function estimates for the assessment of policy response effectiveness.
Figure 21: Depicting the evolution of the estimated non-averaged R* as compared to the prevailing Repo Rate, and 3-month T-Bill yield.
Figure 22: Depicting the Indian monetary corridor dynamic post the pandemic.
Figure 23: Depicting estimated non-averaged R* evolution as compared to the prevailing WACR.
Figure 24: Depicting SPF (Survey of Professional Forecasters) Estimates Vs. Actual Headline CPI during and after the pandemic. Assessing forecaster accuracy and data predictability.
Figure 25: Depicting SPF (Survey of Professional Forecasters) Estimates Vs. Actual GDP Growth during and after the pandemic. Assessing forecaster accuracy and data predictability.
Figure 26: Depicting yield spreads of Indian AAA and BBB-rated corporate debt. Pre-post-COVID period evolution.
Figure 27: Spreads between US Government yields and US corporate debt (both AAA and BBB) yields. Duration normalized.
Figure 28: Depicting the cost of capital dynamics, comparing Indian corporate debt yields (AAA and BBB rated) with prevailing MCLR and Repo Rate.
Figure 29: Depicting size and issuance growth of corporate debt.
Figure 30: Depicting the prevailing Discount Rate as compared to the quantum of loans to commercial banks.
Figure 31: Depicting Federal Reserve DW utilizations during crisis periods.
Figure 32: Depicting the Corona case load in India during the pandemic period.
Figure 33: Depicting human lives lost during the pandemic period.
Figure 34: Depicting the model’s forecast accuracy during the pandemic.
Figure 35: Depicting estimated factor evolution based on model output.
Figure 36: Depicting how the Indonesian economy fared during the pandemic period.
Figure 37: Depicting how the Mexican economy fared during the pandemic period.
Figure 38: Depicting how the Namibian economy fared during the pandemic period.
Figure 39: Depicting how the Japanese economy fared during the pandemic period.
Tables
Table 1: Atmanirbhar Bharat Abhiyan 1.0 (Government’s COVID-19 Package Highlights) (Q1 FY20–21). Data sourced from Press Bureau (PIB), Government of India.
Table 2: Atmanirbhar Bharat Abhiyan 2.0 (Government’s COVID-19 Package Highlights). Data sourced from Press Bureau (PIB), Government of India.
Table 3: Atmanirbhar Bharat Abhiyan 3.0 (Government COVID-19 Package Highlights). Data sourced from Press Bureau (PIB), Government of India.
Table 4: Atmanirbhar Bharat Abhiyan 4.0 (Government COVID-19 Package Highlights) Q1 FY21–22. Data sourced from Press Bureau (PIB), Government of India.
Table 5: Atmanirbhar Bharat Abhiyan 5.0 (Government COVID-19 Package Highlights) Announced in FY22–23. Data sourced from Press Bureau (PIB), Government of India.
Table 6: Total Stimulus Packages (All Packages).
Table 7: Monetary and Fiscal Combined Packages Estimates.
Table 8: Government of India Fiscal Position FY20–21 to FY21–22 (in ₹Crore.). Sourced from Union Budget documents and the author’s estimates.
Table 9: Government of India Fiscal Position FY21–22 to FY22–23 (in ₹ Crore) Cont.
Details
- Pages
- XXII, 186
- Publication Year
- 2026
- ISBN (PDF)
- 9781803747163
- ISBN (ePUB)
- 9781803747170
- ISBN (Hardcover)
- 9781803747156
- DOI
- 10.3726/b22279
- Language
- English
- Publication date
- 2026 (January)
- Keywords
- Central Banking Monetary Policy Systemic Risk Management Crisis Management Covid-19 emerging markets Indian economy Karan Mehrishi Macro-Finance Fiscal Management
- Published
- Oxford, Berlin, Bruxelles, Chennai, Lausanne, New York, 2025. xxii, 186 pp., 39 fig. b/w, 31 tables.
- Product Safety
- Peter Lang Group AG
