Mumbai: The Reserve Bank on India (RBI) on Friday said India's gross domestic product (GDP) growth will be in negative territory in 2020-21 as the outbreak of coronavirus has disrupted economic activities.
In a televised address, RBI Governor Shaktikanta Das said the global economy is heading into recession. He also said inflation outlook is "highly uncertain".
"Domestic economic activity has been impacted severely by the two-month lockdown," he said and added that the top-six industrialised states that account for 60 per cent of India's industrial output are largely in red and orange zones.
He said high-frequency indicators point to collapse in demand, and there is a plunge in demand for electricity and petroleum productions.
The biggest blow is to private consumption that accounts for 60 per cent of domestic demand, the governor said.
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Das said the combined impact of demand compression and supply disruption will depress economic activity in the first half of the current fiscal.
"Assuming that economic activity gets restored in a phased manner in the second half of this year and taking in consideration favourable base effect, it is expected that combined fiscal, monetary and administrative measures currently undertaken by both the government and RBI create conditions for gradual revival of activities in the second half of 2020-21.
"GDP growth in 2020-21 is estimated to remain in the negative territory with some pick up in growth impulses in the second half of 2020-21 onwards," he said.
Indian economy to contract in FY21; lockdown compounds economic challenges, says Moody's
Moody's Investors Service said India's economy is expected to contract for the first time in more than four decades saying economic damage owing to the coronavirus-induced lockdown will be significant with lower consumption and sluggish business activity.
Even before the coronavirus outbreak, Indian economy already was growing at its slowest pace in six years and with the stimulus measures announced by the government falling short of expectations, the disruptions are likely to be greater.
"We now expect India's growth to register a real GDP contraction for the fiscal year ending in March 2021 (fiscal 2020-21), from our earlier projection of zero growth," it said in a research note.
It however expected the economy to see a recovery in fiscal 2021-22, somewhat stronger than its earlier forecast of 6.6 per cent growth.
India's GDP could soar by 20% post lockdown, predicts Goldman Sachs
India's Gross Domestic Product (GDP) could soar by 20 per cent in the third quarter of 2020, according to predictions by Goldman Sachs which have been stated by The Economist in a detailed story on Economic Lockdowns and their implications.
The GDP, which would fall in the second quarter at an annualised quarterly rate of 45 per cent, would rebound by 20 per cent in the third quarter if the coronavirus lockdowns are lifted, Goldman Sachs predicted earlier this week.
The lockdowns in various countries ever since Covid-19 erupted in China and engulfed the globe, slowed down the pandemic but at the cost of economies, and India is not an exception. According to the article in The Economist, "Lockdowns can only ever be temporary. That is because it is becoming clear how costly they are, especially in poor countries. Part of the price is economic."
(Inputs from PTI And ANI)
