In the wake of the extension of the nationwide lockdown to battle coronavirus, foreign brokerage firm Barclays has lowered India's GDP forecast for the calendar year (CY) 2020 to 0 percent from 2.5 percent earlier. Barclays has also revised its GDP growth forecast for the financial year (FY) 2020/21 to 0.8 percent from 3.5 percent earlier.
It further stated that India's economy stands to bear an even heavier loss than anticipated due to the restrictions imposed in several sectors in order to fight the novel coronavirus pandemic. "Combined with the disruption in several service sectors, we now estimate that the economic loss will be close to $234.4 billion (8.1 percent of GDP)," said Barclays in its report, assuming that India will remain under a partial lockdown at least until the end of May.
"This is much higher than the $120 billion we had estimated earlier for roughly the same time period previously. The negative impact of the shutdown measures on the mining, agriculture, manufacturing and utility sectors is massive. Most losses are expected to be incurred in the first part of Q2 2020," it added.
The brokerage also mentioned that the predictions were made keeping in view that India is yet to enter the community transmission stage of COVID-19.
Bigger states likely to suffer maximum loss
Expanding on its estimates, Barclays suggested that large industrial states such as Maharashtra, Delhi, Tamil Nadu, and Punjab could go through the maximum economic losses. However, it also said that things do not look very good for the rest of the states as well.
"Even for states that are likely to experience a faster recovery cycle, such as Kerala, Karnataka, Haryana, while their economic losses will likely be limited, we think a precautionary increase in savings and reduction in discretionary consumption, especially on travel and recreational services, will weigh on growth rates longer. This drives the downward revision in our growth recovery outlook to show a shallower pick-up in Q3," Barclays noted in its report.
The brokerage even negated the "modest fiscal stimulus" unveiled by the Centre to save the dwindling economy.
Lockdown extended till May 3 as COVID-19 cases breach 10,000-mark
Prime Minister Narendra Modi on Tuesday, March 14, announced that the nationwide lockdown will be extended up until May 3. The decision was reached after several meetings with authorities from different parts of the country.
India's case count is witnessing sharp hikes with each passing day. As of now, the number of COVID-19 patients in the country stands at over 10,000 including more than 1,000 recoveries and close to 400 deaths.