Barclays has further cut India’s GDP forecast for CY2020 to 0.0 per cent and FY21 to a mere 0.8 per cent.
After Prime Minister Narendra Modi extended the nationwide lockdown to May 3, India’s economic concerns have deepened, with Barclays now predicting no GDP growth for the country this year. Barclays today further cut India’s GDP growth forecast for the calendar year 2020 to 0.0 per cent, and FY21 to a mere 0.8 per cent. It said that the economic impact appears to be worse than expected as India has headed into a longer complete shutdown to combat the rising number of COVID-19 cases. After the lockdown was announced three weeks ago, Barclays had cut the country’s GDP growth forecast for CY 2020 to 2.5 per cent from 4.5 per cent, due to a varied level of disruption across India.
The adverse effects of the lockdown are not only visible on the non-essential products, but on the essential goods as well. From mining, to agriculture, manufacturing and utility sectors, all of them are struggling and combined with the disruption in several service sectors, it has been estimated that the economic loss will be close to USD 234.4bn, which is 8.1 per cent of GDP. Earlier, it was estimated that the economic loss would be around USD 120 billion.
Even as the government and RBI have announced a slew of relief measures, no stimulus or relief package can offset the damage done by the lockdown. World Bank has also put forecast for India’s economic growth within a range of 1.5 – 2.8 per cent in the current fiscal. Ironically, a lockdown in India also severely affects the income of other countries in the South Asian region. India comprises 78 per cent of the South Asian region’s gross national income and has important links with other countries in the region through remittances, supply chains, and trade.