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India’s GDP could even shrink 0.9% in case coronavirus outbreak extends: CII

The latest estimates by economists and industry experts highlight a gloomy situation for the county’s economy on account of the coronavirus-triggered lockdown.

SNS | New Delhi |

Amid the nationwide lockdown, the economists and industry experts are estimating contraction for country’s GDP or gross domestic product.

The latest estimates by economists and industry experts highlight a gloomy situation for the county’s economy on account of the coronavirus-triggered lockdown, which continues to disrupt businesses worldwide.

As per the reports, the Confederation of Indian Industry (CII) has said the country’s GDP could even shrink 0.9 per cent in case the outbreak extends and spreads further.

In a report, titled “A Plan For Economic Recovery”, the CII estimated economic expansion between a negative 0.9 per cent (contraction) and 1.5 per cent based on three scenarios: “optimistic” (1.5 per cent growth), “base” and “downside risk” (0.9 per cent contraction).

“Given the extent of damage to the economy from disruption to business, the GDP growth in FY21 is likely to be the lowest in many decades,” said Director General Chandrajit Banerjee while releasing a paper with three scenarios.

Another Credit ratings major Fitch has also brought down its growth forecast for the country to 0.8 per cent in the fiscal year ending March 2021. Earlier, three weeks ago, it had projected a 2 per cent growth rate for the country.

It further expected the growth to rebound to 6.7 per cent in 2021-22.

The rating agency has predicted two consecutive quarters of contradiction – (-) 0.2 per cent in April to June and (-) 0.1 per cent in July to September.

As per the definition, the two consecutive quarters of negative GDP growth are known as a recession.

“World GDP is now expected to fall by 3.9 per cent in 2020, a recession of unprecedented depth in the post-war period,” NDTV quoted Brian Coulton, Chief Economist at Fitch Ratings as saying.

Government has announced a spending package of Rs 1.7 lakh crore, and the central bank has cut key interest rates to fight down the economic crisis due to the 40-day lockdown.

However, many economists believe that the measures announced by the government and the RBI fall short of the support needed to aid the country’s fight against the pandemic.