Indian economy may contract by 5% in FY21 while losing what it had gained in its past history of steady growth. The estimates for the month of April were 1.8% but the performance was even lower and slipped to negative. India’s partial lockdown continues to be a hindrance to normal economic activity while the bogus economic package is unlikely to boost the economy in the short run.
The government has extended the lockdown four times till 31 May to deal with the rising number of coronavirus cases, thus curtailing economic activity severely. The economic cost of the lockdown has begun to show on hard numbers with factory output contracting 16% in March and merchandise exports falling by an unprecedented 60% in April.‘ Partial relaxations continue to be a hindrance to supply chains, transportation, and logistics. Hence, unless the entire supply chain is unlocked, the impact of improved economic activity will be subdued’, an excerpt from the World-renowned rating agency Crisil read.
It also added that India is eating upon its reserves even before the two-month lock-down and in the first quarter the economy is likely to contract 25%. The first quarter of this fiscal will be the worst affected. June is unlikely to see major relaxations as the Covid-19 affliction curve is yet to flatten in India.
The Indian FM Nirmala Sitharaman had persistently denied the great fall of economy till Reserve Bank Governor Saktikanta Das last week agreed the projections of rating agencies were true that the nation is treading a negative slope.