Impact of Lockdown on the Indian Economy:

1. Economic Contraction: The COVID-19 lockdown led to a significant contraction in economic activity. Sectors such as tourism, hospitality, and retail faced severe disruptions due to halted operations and reduced consumer spending.
2. Unemployment Surge: Many businesses, especially small and medium enterprises, shut down or scaled back operations, leading to a sharp rise in unemployment and income loss for a large portion of the workforce.
3. Supply Chain Disruptions: The lockdown disrupted domestic and global supply chains, causing shortages of essential goods and raw materials. This led to inflationary pressures and impacted manufacturing and export activities.
4. Government Revenue Decline: The economic slowdown resulted in reduced tax revenues, affecting the government’s ability to fund public services and welfare programs.

Budgetary Strategy for Combating Recessionary Trends:

1. Stimulus Packages: The government announced stimulus packages to revive economic activity. These included direct financial support to affected sectors, increased public expenditure on infrastructure projects, and subsidies for small businesses.
2. Tax Relief Measures: Measures such as tax deferrals and exemptions were introduced to provide relief to individuals and businesses, thereby boosting disposable income and encouraging consumption.
3. Support for MSMEs: The government provided credit facilities and financial assistance to micro, small, and medium enterprises (MSMEs) to help them manage cash flow issues and retain jobs.
4. Healthcare Investment: Increased budget allocation for healthcare infrastructure aimed to improve the country’s pandemic response and safeguard public health, which was critical for economic stability.
5. Reforms and Ease of Doing Business: Reforms were introduced to improve the ease of doing business and attract investment, including regulatory simplifications and incentives for industries.

These budgetary strategies were designed to mitigate the adverse effects of the lockdown, stimulate economic recovery, and address the immediate needs of businesses and individuals during the recessionary period.