The economy is expected to lose nearly $100 billion during the 21-day lockdown due to coronavirus, a credit rating agency said. Each day of the shutdown may cost the economy more than $4.5 billion, Acuite Ratings said in a report. In the last week of March, Prime Minister Narendra Modi announced a three-week complete lockdown of the country until April 14 to prevent spread of coronavirus. Q1FY21 GDP is expected to see a risk of contraction to the tune of 5 per cent to 6 per cent with Q2 also likely to record a muted growth, the rating agency also said. Despite the expectation of a significant economic revival in the second half, the overall GDP growth for FY21 may remain in the range of 2 per cent to 3 per cent, Acuite Ratings added.
The worst affected services due to the lockdown include transport, hotel and restaurant and real estate. These industries account for nearly 22 per cent in GVA. "We are expecting around 50% loss in these sectors in Q1 of FY21. Agricultural sector that accounts for 15% of GVA will be relatively less impacted as crop harvesting and food distribution activities will continue; however, livestock and fishery segments to witness mute demand and lower the sector's average 3.5-4% growth", Acuite Ratings said in the report.
Moody's Investors Service has also slashed its estimate of India's GDP growth for the calendar year 2020 to 2.5 per cent from an earlier estimate of 5.3 per cent, citing the rising economic cost of the coronavirus pandemic.
Meanwhile, both the government and the RBI have announced a slew of measures to mitigate the negative impact of COVID-19 on the economy. Finance Minister Nirmala Sitharaman last month announced a relief package worth Rs 1.70 lakh crore to help the nation's poor tackle the financial difficulties arising from coronavirus outbreak. Similarly, the RBI has announced proposals to provide relief to the loan borrowers, state governments, exporters and banks.