Diplomacyindia.com


India’s economy on a double-digit downswing as Covid-19 cases spike

India’s economy on a double-digit downswing as Covid-19 cases spike
September 21
15:32 2020

New Delhi  (India), September 21 — As India emerges as new global hotspot for coronavirus (Covid-19) pandemic with more than 5 million infections, several global institutions are casting doubts over its economic growth recovery.

Official figures show that gross domestic product (GDP) dipped by 23.9 per cent in the first (April to June) quarter of current financial year (2020-21) from a year ago, marking the biggest decline since 1996.

The Asian Development Bank recently cut India’s growth projection to minus 9 per cent as the virus continues to spread. Goldman Sachs estimates 14.8 per cent contraction in India’s GDP for FY21. The Organisation for Economic Cooperation and Development (OECD) sees the economy shrinking by 10.2 per cent.

India lately began easing one of the world’s strictest and biggest lockdowns that started late March. Local virus cases topped the 5 million mark this week with the death toll surpassed only by the United States and Brazil.

While a second wave of infections is being witnessed globally, India still has not been able to flatten the first wave of infection curve, said Sunil Kumar Sinha, Principal Economist at India Ratings and Research Ltd. He now projects the economy contracting by 11.8 per cent in FY21, lower than his earlier projection of 5.8 per cent.

Reserve Bank of India (RBI) Governor Shaktikanta Das said earlier this week that India’s economic recovery is likely to be gradual as the country is still reeling from the impact of Covid-19 and rising infections continue to pose a risk.

The measures taken by RBI are intended to deal with the specific situation of Covid-19 and cannot be permanent. Das said that while green shoots are emerging and businesses are getting back to normalcy, it is hard to measure the impact of Covid-19 on economy.

The RBI has taken various steps like interest rate cuts and moratorium on debt servicing. But there has to be a calibrated, cautious exit plan for the long-term, he said.

In August, the RBI said private spending on discretionary items had taken a knock, especially on transport services, hospitality, recreation and cultural activities.

Many economists say corporate profits have collapsed and put a brake on investments which will curb employment and growth in the economy.

S&P Global Ratings said this week it expects India’s economy to contract by 9 per cent in the current fiscal year ending March 31, 2021 as rising Covid-19 cases will keep private spending and investment lower for longer. Its previous forecast had put the economic hit from Covid at minus 5 per cent.

“One factor holding back private economic activity is the continued escalation of the Covid-19,” said Vishrut Rana, Asia Pacific Economist for S&P Global Ratings.

Weak demand continues to be the key bottleneck for companies as nearly 68 per cent of the companies surveyed recently by industry body FICCI and Dhruva Advisors reported this to be their biggest challenge.

In fact, 41 per cent of the companies said their sales in August were less than 50 per cent of their sales in the same month last year. Another 21 per cent said that sales in August were between 50 to 75 per cent of the sales recorded in August last year.

Related Articles

0 Comments

No Comments Yet!

There are no comments at the moment, do you want to add one?

Write a comment

Write a Comment

Your email address will not be published.
Required fields are marked *

Social Icons

ENVOY SPEAKS : EXCLUSIVE VIDEO CHAT WITH H.E. YERLAN ALIMBAYEV, AMBASSADOR OF KAZAKHSTAN TO INDIA

Diplomacyindia.com Video Interview with Shri Dnyaneshwar M. Mulay Secretary (CPV & OIA), Ministry of External Affairs speaking on an eventful journey of Indian Passport through its serveral phases, fast expanding network of passport seva kendras, evergrowing numbers, citizen centric service & new Initiatives

Diplomacyindia.com Video Interview with Shri Dnyaneshwar M. Mulay Secretary (CPV & OIA), Ministry of External Affairs speaking on safety & security features of the passport documents in an era of digitalisation his cherished moments & milestones as “Passport Man” of India tranforming the entire passport landscape.

Diplomacyindia.com Video Interview : Mrs. Reva Ganguly Das (IFS) Director General, Indian Council of Cultural Relations Speaking on Yoga Day Celebrations

Exclusive Interview to Diplomacyindia.com with Shri Upendra Tripathi, IAS Interim DG, International Solar Alliance (ISA) speaking on the journey of ISA so far, guiding principles, vision & priority areas & programmes for ISA.

Exclusive Interview to Diplomacyindia.com with Shri Upendra Tripathi, IAS Interim DG, International Solar Alliance (ISA) speaking on expanding rank of international solar alliance & opening the membership to the countries beyond tropics.

Diplomacyindia.com Exclusive Interview with Ambassador of Slovenia to India, H.E. Mr. Jozef Drofenik speaking on Bilateral Relations and Trade between India and Slovenia

Diplomacyindia.com Exclusive Interview with Ambassador of Slovenia to India, H. E. Mr. Jozef Drofenik speaking on Tourism in Slovenia

Pictures of Formal Launch of Website Diplomacyindia.com

Knowledge Partner

Exclusive Interview with Prime Minister of Guyana, H.E. Mr. Moses Veerasammy Nagamootoo during his recent visit to India.Highlights of the interview were Indian Cultural Connect, Vibrant Bilateral Ties and Cultural Connect and India’s Economic Prowess.

Video Message from Shri Prakash Javadekar, MoS (IC) for Forest, Environment & Climate Change on eve of Formal Launch of Website Diplomacyindia.com

Message from Gen. V K Singh, (Retd.) Hon’ble MoS, External Affairs to Diplomacyindia.com

WP2Social Auto Publish Powered By : XYZScripts.com