Finance Ministry in a report on Monday said that as predicted by the International Monetary Fund, India’s Gross Domestic Product (GDP) will contract 4.5 per cent in the current fiscal year due to the impact of coronavirus.
The Finance Ministry’s economic report for June comes days after the government declared Unlock 2.0.
“The uncertainty caused by the absence of a vaccine against the coronavirus pandemic poses a serious challenge to the economy, the Department of Economic Affairs (DEA) said in its macroeconomic report.
The economic growth of pre-COVID times, as and when restored through fuller unlocking of the economy, will heavily lean on the reforms undertaken today to enhance its potential tomorrow, it added.
Even after the government had announced Unlock 2.0, the economy, which suffered a lot due to the spread of coronavirus pandemic resulting in lockdown, struggles to come back on the track.
The report further said that the Centre’s structural reforms and social welfare measures will help build green shoots in the economy.
Atmanirbhar Bharat stimulus package has accelerated the reforms at a time when the pandemic has led to fiscal constraints for the government and hampered public spending, it added.
The world is witnessing an unprecedented crisis since January 2020 with the highly contagious COVID-19 hitting major economies of the world in rapid succession, according to the report.
“Since its first outbreak in Wuhan, China, it has infected more than 200 countries with total number of confirmed cases exceeding one crore and the virus claiming more than five lakh lives,” it said.
The report also mentioned the domestic financial markets, and said that COVID-19’s impact on the economy is rapidly evolving, which is driving market volatility on a daily basis.
“With huge uncertainty around the pandemic stemming from the unknown, and the inability to plan for or know what’s next, such uncertainty is expected to adversely affect business climate and make firm delay their investment plans,” it said.
Amid the spread of coronavirus, Prime Minister Narendra Modi had in the month of May amid the lockdown had introduced an Rs 20 lakh crore stimulus package for the struggling economy.
The package had several sub-packages for agriculture, MSMEs, migrant workers and farmers among others.