Prime Minister Narendra Modi extended the three-week lockdown which will end on May 3. To restrict the growth of COVID-19. He also said that there will be relaxations at unaffected areas starting from April 20. Those relaxations will be based on strict monitoring.
Extension of the nationwide lockdown till 3 May will cause an economic loss of $234.4 billion (approx Rs 18 lakh crore). This results in static GDP for the calendar year 2020, a British brokerage said on Tuesday. Earlier, it was expected that India to clock a 2.5 percent growth in calendar 2020, which has now been projected to be zero. The FY21 growth has been revised down to 0.8 percent from the 3.5 percent earlier.
Barclays recognizes that the coronavirus pandemic has not officially reached the community transmission stage. The restriction on movements is causing much more economic damage. It also said that “The negative impact of the shutdown measures on the mining, agriculture, manufacturing and utility sectors appears higher than we had expected”.
Barclays also estimates the Kharif crop cycle during the monsoon will remain unaffected. The brokerage also expects a loss and rising risk of COVID outbreaks leading to local-level shutdowns. The negative impact on the essential sectors like mining, agriculture, manufacturing and utility sectors is more than expected.
India heads into a longer complete shutdown until May 3 to combat the rising number of COVID-19 cases. The economy will be worst than expected earlier. The brokerage said that it has assumed that the lockdowns end by early June, followed by a modest rebound in activity, reflecting inventory rebuilding across certain sectors. Also, there will be major losses across Indian industrial states.
If the COVID-19 outbreaks in a localized area continue leading to further lockdowns, the scope for the economy to recover will continue to decline, it warned.