New Delhi: According to a credit rating agency, the 21-day lockdown is going to cost India roughly around $100 billion due to the ongoing corona virus pandemic. The rating agency estimates that every single day of the lockdown will cost the Indian economy almost $4.64 billion and consequently this three-weeks’ lockdown will result in a loss of GDP of almost $98 billion and estimates that the it may contract up to an extent of 5-6 per cent as compared to a pre-virus growth estimate of 5 per cent.
Prime Minister Narendra Modi announced a 21-day lockdown till April 14, in order to break the transmission chain of the novel Coronavirus. The agency goes on to say that the worst hit sectors due to the lockdown are transport, hotel, restaurant and real estate activities and said that there will be 50 per cent of gross value added (GVA) loss in these sectors. On the other hand, the sectors that will be witnessing enhanced activity are communications, broadcasting and healthcare. However, the catch remains that these sectors contribute a mere 3.5 per cent towards the overall GVA.
Sharing his views on the same, Karan Mehrishi, lead economist, Acuite Ratings and Research says, “The agriculture sector, which accounts for 15 per cent of GVA is nonetheless expected to see continued activity even in the lockdown period however, the allied activities are partly impacted as livestock and fisheries are experiencing mute demand due to the COVID-19 concerns.”
Even before the pandemic spread its tentacles to India, the Indian economy was already sputtering and was reeling under huge distress and this pandemic has unleashed a double attack on already tottering economy. The report also says that even if the lockdown will be lifted on April 14 it would take at least 2-3 months to restart the industry supply chain and there are further risks of local lockdown in various regions of the country depending on the extent of the outbreak.
Throwing light on the recovery side Acuite says that a quick recovery in the domestic economic activities is likely in H2, which may in turn benefit from huge fiscal and monetary measure along with lower global oil prices and on a quarter wise analysis expect the overall GDP growth for FY21 to be in the band of 2-3 per cent.
However, the global economy could shrink by one per cent in 2020 due to covid-19 as per the analysis done by the United Nation said on Thursday. The analysis by the UN department of Economics and Social Affairs (DESA) said that the COVID-19 pandemic is disrupting global supply chains and international trade as nearly 100 countries have closed their national borders in last one month.