COVID-19 and its Likely Impact on the Indian Economy vis-a-vis Inflation, Inflation Expectations and Future Scenario

This study throws light on the Coronavirus disease (COVID-19) pandemic situation in India and how it is impacting and will impact the Indian economy concerning inflation, inflation expectations and recession. The author examines the relation between headline inflation and inflation expectations both prior to and after the rise of COVID-19. The data showed an increase in headline inflation before the COVID-19 followed by negative inflation after its emergence. The study found the inflation expectations of households and professionals in the country were very well linked to the actual inflation. The analysis suggested that the inflation was going to be low in the economy accompanied with at least a short run recession. The author also analyses the plausible situation of uncertainty in a future scenario, where demand and supply shocks are likely to emerge in the economy and how the government stimulus can play a vital role in uplifting the aggregate demand. At last, this study also emphasised on the ways that are being used to revive the economy domestically and globally.