Lockdown for one month to shave off 2% of GDP: Report

According to the US-based BofA Securities, a nationwide lockdown will pose a threat to the fragile economic recovery. It also suggested the Centre and State governments to try to contain the spread with the tightening of Covid-19 regulations, night curfews and localized lockdowns.

Mumbai: India's economic recovery is still "shallow" and a month's national lockdown to curb the rising pace of COVID-19 infections can dent the GDP by up to 2 per cent, an American brokerage warned on Tuesday.

Analysts at BofA Securities said there has been a six-times increase in the number of infections to over 1.03 lakh, and state governments have responded with localised lockdowns till now.

A national lockdown, which it reckoned as a "last resort", if declared, can have deep impact on the growth process, which is still "shallow", it said.

"We grow even more concerned that rising Covid-19 cases pose a risk to our still shallow recovery...We estimate that a month of national lockdown costs 100-200 bps of annual GDP. Needless to say, this also aggravates fiscal risks," it said.

Given the high economic cost, BofA Securities suggested the Centre and State governments to try to contain the spread with the tightening of Covid-19 regulations, night curfews and localized lockdowns.

Last year, the country was under one of the strictest lockdowns globally causing an unforeseen damage to the economy.

According to the official estimates, gross domestic product (GDP) or the total value of goods and services has shrunk by a whopping 23.9 per cent in the April-June quarter over a year ago period.

Similarly, the GDP de-grew by 7.5 per cent in the subsequent quarter (July-September) pushing the Indian economy into its first ever technical recession.

However, partly due to low base effect, various agencies have estimated a double digit GDP growth in the current financial year.

(With PTI Inputs)