Impact of COVID-19 on the Fiscal Health of India

Abstract

With the emergence of COVID-19 within Odisha, preventive measures like partial or total lockdown of the state have been undertaken by the government to control its spread despite the provision of health-related infrastructure. Among the 14 major states of India, Odisha is a poor state. However, the spread of the pandemic has become massive. In this context, this chapter attempts to examine the fiscal health of India at the sub-national level from the state of Odisha. The revenue generation capacity declines to a larger extent while expenditure responsibilities in terms of health expenditures expand tremendously. Consequently, the state has to face serious difficulties in sustaining its fiscal balance. This chapter observes that the fiscal health of the state deteriorated to a larger extent during the lockdown period than the pre-lockdown period. In such a critical situation, the state needs to plan effective strategies to raise the level of income through fiscal policy allowing economic activities compromising the sanitization measures of the pandemic.