Hyderabad: With more than 150 confirmed cases, and three deaths within a span of last one week, the threat of novel coronavirus has become all the more real for a developing economy like India. It forced the government to order closure of public places like schools, hotels, shopping malls, clubs and other crowded public places, significantly affecting the business activity. A top economist told ETV Bharat that the growth will be significantly impacted due to Covid-19 outbreak.
“In our earlier estimate, we had projected that the economy will grow by 5.5% in FY 2020-21. And given the unfolding situation, it is clear that the growth will now be less than that,” said Sunil Sinha, Principal Economist of India Ratings, a Fitch company.
Sunil Sinha said India Ratings was in the process of making its estimate on the economic impact of Covid-19 on India as the situation was still unfolding and the country was not in a complete lockdown mode unlike China.
“At present, India is at stage 2, and it depends on how well we manage if we slide towards stage 3 because the situation is extremely fluid,” he said.
“The government has not yet ordered a complete lockdown unlike China’s Wuhan province but these restrictions are expected to significantly impact GDP growth,” said Sunil Sinha.
“My own estimate is that GDP growth will come down below our earlier estimate of 5.5% GDP growth for FY 2020-21,” he told ETV Bharat.
The outbreak of coronavirus could not have come at a worse time for Indian economy as it was already in the grip of a systematic slowdown for the last more than one year.
In the third quarter of this fiscal (October-December 2019), the GDP growth was recorded at 4.7%, the slowest in the last six years.
While commenting on the GDP data, economic affairs secretary Atanu Chakraborty had last month said that the slowdown had bottomed out and Indian economy will pick up the pace from the fourth quarter onwards.
Last month, chief economic advisor Krishnamurthy Subramanyian had also rejected the fears of any impact of coronavirus on Indian economy, though by the time the government had already started screening the passengers coming to India from abroad.
It’s clear that the government could not anticipate how rapidly the situation would unfold in countries like Italy, Iran and Spain and its impact on the economy and stock markets in India and abroad.
Travel, tourism, hospitality sectors to be worst hit
The restrictions imposed by the government to prevent a community spread of this deadly and highly infectious virus have already impacted the travel, tourism and hospitality sectors in the country.
“If the situation reaches to the stage of lockdown then the entire economy will be hit,” said Sunil Sinha who has closely tracked macro-economic indicators for several years.
He, however, explained that some of the services may be less impacted as they have the flexibility to ask their employees to work from home whereas the manufacturing sector doesn’t have this flexibility.
(Article by Senior Journalist Krishnanand Tripathi)
