Even as the Indian economy has been hit by coronavirus pandemic, the damage is expected to be limited if the situation eases by mid-May, according to Tanvee Gupta Jain, chief India economist, UBS. The GDP growth may see an upside of 4 per cent for the fiscal year 2020-21 if the situation normalises by next month, Tanvee Gupta Jain added. However, the disruption is likely to last till September if the situation doesn't improve and lockdown extends. The consumption would be negatively impacted on account of possible job losses and reduced incomes, Business Standard quoted Jain. India may witness a negative GDP growth for the first time since the financial year 1980 in a downside scenario, the UBS India economist said.
Tanvee Gupta Jain said that nearly 30 per cent of the household consumption was connected to services. The demand for service may see a fall amid the lockdown and mobility restrictions, she added. Meanwhile, former Reserve Bank of India (RBI) Governor Raghuram Rajan on Saturday said that the Indian economy is facing the 'greatest emergency' since independence, more acute than the global financial crisis in 2008-09.
The workers could still go out to work during the financial crisis as against the current situation, Raghuram Rajan, professor of finance, University of Chicago Booth School of Business, said in a blog titled 'Perhaps India's Greatest Challenge in Recent Times'. "The global financial crisis in 2008-09 was a massive demand shock, but our workers could still go to work, our firms were coming off years of strong growth, our financial system was largely sound, and our government finances were healthy," Raghuram Rajan added.