Subscribe

0

  • Sign in with Email

By clicking the button, I accept the Terms of Use of the service and its Privacy Policy, as well as consent to the processing of personal data.

Don’t have an account? Signup

  • Bookmarks
  • My Profile
  • Log Out
  • NEWS
  • POLICIES
  • MSME OPPORTUNITIES
  • BANKING & FINANCE
  • TECHNOLOGY FOR SMES
  • SECTORS
  • GLOBAL
  • Investment
  • LEGAL
  • KNOWLEDGE QUEST
  • Future Ready Forum 2025
  • Ek Nayi Udaan
  • Future Ready Summit 2024
  • ADVERTISE WITH US
ad_close_btn
  • News
  • Policies
  • Banking & Finance
  • MSME Opportunities
  • Web Stories
  • InFocus
  • Technology For SMEs
  • Sectors
  • Global
  • Fashion

Powered by :

You have successfully subscribed the newsletter.
Banking & Finance Finance

Delay in COVID Vaccine May Lead to 7.5% Contraction in Indian GDP

Economists at Bank of America Securities also revised down their base case estimates on the real GDP within a week, and now expect it to contract by 4 per cent because of a drop in economic activity.

author-image
SMEStreet Desk
14 Jul 2020 04:16 IST

Follow Us

New Update
COVID-19 & GDP, SMEStreet.in

While looking at the current scenario, financial experts came forward with their study that says a longer wait for a vaccine against COVID-19 virus may lead to a contraction of up to 7.5 per cent in the Indian GDP in FY21.

Economists at Bank of America Securities also revised down their base case estimates on the real GDP within a week, and now expect it to contract by 4 per cent because of a drop in economic activity.

It can be noted that multiple efforts to find a vaccine against the dreaded virus are on both globally as well domestically, but no timelines have been announced yet.

Many analysts are expecting the Indian economy to contract by 5 per cent in FY21 as a result of the nationwide lockdowns, with some also estimating a contraction of up to 7.2 per cent in the GDP.

"India's real GDP will likely contract by 7.5 per cent if the global economy has to wait for a vaccine discovery for a year," the BofA analysts said, calling this as the "bear case".

A base case is the most probable case or expected case. While a bear case means a typically pessimistic case.

The analysts, who were earlier estimating a 5 per cent contraction in the worst-case scenario, said every month of lockdown is costing 1 percentage point from a yearly growth perspective for the Indian economy.

In response, the Reserve Bank of India (RBI) will cut rates by another 2 percentage points in FY21, they said.

Citing movement on a proprietary indicator on economic activity, it said the indicator fell 20.6 per cent in May after the 29.7 per cent fall in April. Industrial production contracted by 34.7 per cent in May, atop April's 57.6 per cent, it said, estimating the Q1 GDP to contract to 18 per cent.

As the cases of COVID-19 infections have trebled since the country began getting into an unlock phase, the present restrictions will get extended to mid-September as against an earlier projection of mid-August, the economists said, adding a full restart of activities will only be possible by mid-October.

Apart from this, several states are imposing localised lockdowns like the ones across many urban centres in Maharashtra.

"As a result, we now expect FY21 GDP to contract by another 1 per cent to 4 per cent," they said.

The RBI is estimated to cut rates by 0.75 per cent more in the current fiscal as a base case, the Centre's fiscal deficit will come at 6.85 per cent of GDP as against the budgeted 3.5 per cent and the overall fiscal deficit will be at 10.7 per cent, it said.

SMEStreet.in COVID 19 Bank of America COVID-19 & GDP COVID Vaccine GDP
Subscribe to our Newsletter! Be the first to get exclusive offers and the latest news
logo

Related Articles
Read the Next Article
Latest Stories
Subscribe to our Newsletter! Be the first to get exclusive offers and the latest news

Latest Stories
Latest Stories
    Powered by


    Subscribe to our Newsletter!




    Powered by
    Select Language
    English

    Share this article

    If you liked this article share it with your friends.
    they will thank you later

    Facebook
    Twitter
    Whatsapp

    Copied!