The COVID-19 lockdown has brought India’s economic activity to a standstill, and the latest economic forecasts reinforce fears of a sharper de-growth. After crunching some numbers on Tuesday, research firms Crisil and SBI Research were convinced that FY21 GDP will shrink 5% and 6.8%, respectively. These estimates are in line with foreign research houses, which first delivered the shocker last week that India is on course to witnessing its worst recessions this fiscal.
“The first quarter (2020) is going to be a battle for a staggering 25 percent contraction. Around 10 percent of the gross domestic product in genuine terms could be for an all-time loss. So, returning to the development rates seen before the pandemic is impossible in the following three fiscals,” it said in its assessment of India’s GDP.
India’s gross domestic product has been on a downward spiral for six sequential quarters, completing at 4.5% in the September 2019 quarter. Private consumption, which contributes about 60% to the gross domestic product, is growing at 5.7% in 2019-20, much below the rate of the previous financial year when it grew at 8.1%. The National Statistical Office has now forecasted that India’s gross domestic product growth will hit an 11 year low of 5% in 2019-20, down from 6.8% in the previous year.
Stating that the economic costs now beginning to show up in hard numbers are far worse than initial expectations, it said industrial production for march fell by over 16 percent, exports contracted 60.3 percent in April and new telecom subscribers declined 35 percent, while railway freight movement plunged 35 percent this year.
Crisil said “the package can cushion the economy for the short term but it sights majorly on reforms, which can be only payoffs over the medium term” on the economic relief package of 20.9 lakh crore announced by the government to support the economy. Due to Covid19, the impact on the economy is due to its struggle with imports, exports, Financial markets, etc. And as the number of patients is increasing day by day globally and in India, the change in the stock market, economy, etc. cannot be predicted.
