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India’s GDP estimate states, “There will be a contraction of up to 25 percent in the first quarter (April to June 2020).”
“In actual terms, about 10% of gross domestic product (GDP) could be permanently destroyed. So the next three fiscals are unlikely to go back to the growth rate seen before the epidemic.”
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In the last 79 years, India has seen recession only three times according to the data available in 195, 19, 19 and 19. The reason was the same every time – the monsoon shock, which affected agriculture, then a large part of the economy.
Crisil said the slowdown in the current financial year (April 2020 to March 2021) is different because agriculture is growing near its trend rate, given the normal monsoon.
The coronovirus lockdown, first imposed on 25 March and extended three times as of 31 May, has severely halted economic activity.
“The first quarter of this fiscal will be the worst hit,” it said. “Not only will the first quarter be a washout for the non-agricultural economy, services such as education, and travel and tourism among others, could continue to be a big hit in the coming quarters. Will see extended losses in the form of jobs and income. The region has large employers. ”
It also saw economic activity in states with high COVID-19 cases that faced prolonged disruption as sanctions could continue for longer periods.
Noting that economic costs have now begun to appear in stark numbers, far worse than initial expectations, it said industrial production fell more than 16 percent for March, with exports up 60.3 percent in April and new telecom customers 35. The percentage has fallen, while railway freight has fallen by 35 percent year-on-year.
He said, in fact, one of the most drastic lockdowns in the world, April could be the worst performing month for India in this financial year.
Counting lockdown 4.0, Indians have received 68 days imprisonment. S&P Global estimates that a month of lockdown decreases by 3 percent of GDP annually on average in the Asia-Pacific region, as India’s lockdown has been the tightest in Asia, with the impact on economic growth being similarly large.
The report noted that CRISIL reported a rock fall and a 5% drop in FY 2021, forecasting India’s GDP growth.
“Earlier, on April 28, we reduced our forecast from a 3.5 percent increase to 1.8 percent. Since then things have only been downhill. While we expect non-agricultural GDP to contract 6 percent, agriculture will grow. Can reduce the shock. At 2.5 percent. ”
20.9 lakh crores Financial relief package The government announced support to the economy, with Crisil saying the package contains some short-term measures to ease the economy, but sets its sights on reforms, most of which will only have payoffs in the medium term.
“We estimate the fiscal cost of this package at 1.2 percent of GDP, which is lower than what we had previously estimated.”
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