It was predicted by economists in a reuters poll that said, the gross domestic product of India being the world’s fifth-largest economy will contact by 18.3% in the June quarter. This will be the worst performance in at least 8 years. The same economists predicted that there will be a contraction of 8.1% and 1% in the September and December quarters respectively. These predictions have cut the hopes of the economy improving or rising this year
India is the 3rd most affected nation by coronavirus just after United states and Brazil, and has recorded around 35 lakh cases. To control these cases, the restrictions are continued on transport, educational institutions and restaurants and weekly lock-downs in some states. These restrictions have hit the manufacturing services and retail sales, while keeping millions of workers out of jobs.
Shilan Shah, India economist at Capital Economics, Singapore, said in a note on Friday the economic damage caused by pandemic-related lock-downs was much worse in India than any other country in Asia. Shah is predicting a 15% contraction in this June quarter. It has been noticed that the timely indicators show that the post lock-down recovery is now stalling and underscoring the long and difficult road ahead for India’s economy.
Some private economists said the fiscal year that began in April could see a contraction of nearly 10%, the worst performance since India won independence from British colonial rule in 1947. In May, PM Narendra Modi had announced a $266 billion package for various sectors which should have helped the economy improve, but the consumer demand and manufacturing are yet to recover.
The Reserve Bank of India (RBI), which has reduced the benchmark repo rate by a total of 115 basis points since February, kept rates on hold earlier this month amid rising inflation. Policymakers said federal and state governments are unable to increase spending, following a more than 40% fall in tax receipts in the June quarter.
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