The economic costs of the second wave of COVID-19 pandemic in India and lockdowns to curb spread of infection are rising rapidly, and may cost India $74 billion (about Rs 5.4 lakh crore) during April-June quarter, according to Barclays.
While the economy is "reasonably stable", it experienced a sharp decline in activity in May as is evident in high frequency data, the brokerage said in a report.
"While we continue to believe the lockdowns will last only until end of June 2021, in our new base case, we now estimate economic losses of USD 74 billion, all of it contained in Q2 21 (April-June)," Barclays chief India economist Rahul Bajoria said.
It also slashed India's GDP growth forecast for financial year 2021-22 by 80 basis points to 9.2 per cent, citing slow pace of vaccination and lockdowns in different states.
"Although India's second COVID-19 wave has started to recede, the related economic costs have been larger owing to the more stringent lockdowns implemented to contain the outbreak... we lower our FY 2021-22 GDP growth forecast a further 0.80 per cent, to 9.2 per cent," Bajoria said.
However, he said the overall situation is coming under control, despite parts of country witnessing rise in COVID-19 cases, which may result in gradual reopening of the economy.
India reported 1,96,427 new coronavirus cases in the preceding 24 hours as of Tuesday morning, the lowest in 41 days, while fresh fatalities because of infection stood at 3,511, the lowest in 21 days.
Many analysts have slashed their GDP growth forecast for India because of the lockdowns and second COVID-19 wave. Barclays said the economic costs will rise and the GDP growth will slip further to 7.7 per cent in the "pessimist scenario" of a third wave of COVID-19 infections which results in another eight weeks of lockdowns.
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