A Reuters poll predicted India’s weakest GDP growth since 2012 in the January to March quarter. The nationwide lockdown to combat Covid-19 led to the sluggish growth, say experts.
SBI’s research report, Ecowrap, said India’s GDP will be 4.2 per cent in FY20 and (-) 6.8 per cent for FY21.
National Statistical Office will declare the fourth quarter GDP growth number for FY20 on May 29.
We all know that India, Asia’s third largest economy, started moving at a sluggish pace last year. Albeit, the situation turned worse as Prime Minister Narendra Modi announced the nationwide lockdown on March 25. All economic activities came to a halt since then.
“The prolonged period of restrictions, along with limited financial support, means that India’s economy will contract this year for the first in over four decades.” – Shilan Shah, senior economist, Capital Economics, Singapore. Source: The Hindu Business Line
Let’s look at the key findings of the Reuters poll
- Total 52 economists took part in the poll that continued between March 20 to March 25. It showed that India’s economy grew at just 2.1 per cent in the March quarter from a year ago. The slow growth in early 2012 can be this year’s nearest comparison.
- The poll hints at the GDP data, to be released this week, to be ranging between 4.5 per cent and (-) 1.5 per cent. This clearly portrays the huge impact caused by the Covid-19 pandemic on our economy.
- Barring six economists, rest all predicted that the GDP will be hit massively between January and March this year.
- The poll also indicated that even the Centre’s Rs 20 lakh crore stimulus package will just cushion the blow to the economy. The shortfall in demand or dearth of money will still be there.
More lockdown equals to less growth
Economists at India’s largest lender State Bank of India estimated a contract of 6.8 per cent in the economy. Experts at Crisil indicate that it will take at least three quarters to get India’s economy back on track. The world’s largest lockdown certainly turned India into the biggest sufferer of the battered economy. And eventually it is leading towards India’s weakest GDP growth. Now everyone is waiting for the Centre’s next move post May 30 when lockdown 4.0 officially ends.
India’s lockdown is taking both lives and livelihood. Unemployment is at a scary 25% and the GDP in recession will shrink by 5% in current FY.
— Akhilesh Bhargava (@akhilesh_bh) May 26, 2020
In the past 70 years, India witnessed three recessions, in the 1958, 1966 and 1980 fiscals. Environmental impact during monsoon which affected the agriculture sector was responsible for each time. But this time, the nature and cause of recession is completely different. And therefore unique economic reforms is the need of the hour.
— Gita Gopinath (@GitaGopinath) May 25, 2020
According to experts, the agriculture sector could lessen the damage caused by complete shutdown of other economic activities. We can expect a normal and good monsoon owing to reduced pollution and better environmental setup. However, the global uncertainty caused by the Covid-19 crisis also affected India’s export opportunities to a fair extent.
@narendramodi covid cases spreading like wildfires.. everyday. A new high.. india in top 5 active cases.. put another lockdown pls @AmitShah pls give cash to poor ppl.. let them buy veggies and groceries or any essentials.. rural spending will help
— whats in the name (@GaganHR) May 26, 2020
Many believe that Prime Minister’s Atmanirbhar Bharat Abhiyan policy will play an important role in boosting the country’s GDP. It will help India become self-reliant and eradicate poverty. Above all, the poor needs to have access to cash for they run our economy. As soon as the Centre understands this, it’s better for India’s economy.