CIRCULAR FLOW OF

INCOME IN INDIA
DURING COVID

BY - RISHANK
KSHITIZ
5 SECTOR MODEL Resources
Factor payments

Goods & Services

Consumtion Expenditure

Taxation Govt. Spending

Taxes

Savings Investment

Import Payments Export Income

COMMODITY PRICES
The Fundamental Rule of the economy is that
with increasing demand the commodity prices
also increases. So, during the covid, demand for
agricultural goods were on peak so were the
prices.But in case of services like cabs and food
delivery, demand was so low that few companies
were not even able to make survivable profit.
 CEREALS
IMPORTS OF CEREALS IMPORT
ROSE DRASTICALLY BY
156.09 % -6.5%

EXPLOSIVES
EXPLOSIVES WERE NOT
GOODS
AN IDEAL GOOD TO WHICH
WERE
IMPORT DURING THE
PANDEMIC SO ITS

HIGHLY
IMPORT FELL BY 26.46 %

COTTON
EFFECTED
DUE TO INCREASED 2019-20
DEMAND OF MASKS,
ONLY COTTON'S

IMPORT ROSE FROM ALL

THE TEXTILE

RESOURCES BY 84.90 %
 SUGAR
AS 2ND LARGEST EXPORT
PRODUCER OF SUGAR IN
THE WORLD, INDIAS -3.81%
EXPORT ROSE BY
36.63 %

DAIRY PRODUCE
GOODS
WHICH
DAIRY PRODUCE LIKE
EGGS, HONEY, ETC FELL
BY 33.66 %
WERE
HIGHLY
PHARMECEUTICALS
EFFECTED
DURING THE PANDEMIC 2019-20
EXPORT OF PHARMA
PRODUCTS ROSE BY

11.85 %

 OVERVIEW
IMPORT & EXPORT
THOUGH INDIA IS LEADING PRODUCER OF AGRICULTURAL PRODUCTS,
EXPORTS DID'NT RISE BECAUSE CONSUMER DEMAND IN INDIA ITSELF
WAS SO HIGH THAT IT WAS DIFFICULT TO MATCH THAT AMOUNT OF
SUPPLY.
STILL INDIA WAS ABLE TO MAKE AN EXPORT SURPLUS.
IMPACT ON HOUSEHOLDS
IMPACT ON HOUSEHOLDS
Major part of the demand of household was
agricultural produce like coconut water, but
producers were not able to supply that much so
they increased the prices to control the demand.
With increasing prices of goods and negligible
income, consumers started to use their savings to
consume. This is also called dissaving.
 IMPACT ON FIRMS
IMPACT ON FIRMS
Most manufacturing goods like textiles and
machinery had very less demand so production
was almost shut down. Many people also lost
their jobs due to less demand.
Because production cycle was chocked,
government also encouraged the producers to
supply by giving them subsidies and even tax
holidays.
GOVERNMENT
GOVERNMENT
Govt. played a huge role during the pandemic because whole
production cycle was chocked and prices of few goods were so high.

In case of helping consumers, govt. introduced price ceiling so that the

goods could be affordable to poor also.

Govt. also encouraged firms to supply by giving them subsidies and tax
holiday.

Farmers who were the life savers at such a chaotic time were
themselves giving up their lives due to negligible profits. To help them,
govt. introduced subsidies on seeds, pesticides, etc and also
introduced price flooring.
THANK
YOU