Coronavirus Outbreak: GDP likely contract by 4.5% in Apr-Jun quarter; will grow by just 2% in 2020-21, says ICRA

Despite the Reserve Bank of India's (RBI) massive actions to spur the economy, India's gross domestic product (GDP) is likely to contract by 4.5 percent in the April-June 2020 quarter and will rise by only 2 percent in 2020-21 on the coronavirus impact, according to domestic rating agency ICRA

Press Trust of India March 27, 2020 17:11:12 IST
Coronavirus Outbreak: GDP likely contract by 4.5% in Apr-Jun quarter; will grow by just 2% in 2020-21, says ICRA

Mumbai: Despite the Reserve Bank of India's (RBI) massive actions to spur the economy, India's gross domestic product (GDP) is likely to contract by 4.5 percent in the April-June 2020 quarter and will rise by only 2 percent in 2020-21 on the coronavirus impact, according to domestic rating agency ICRA.

While announcing a number of measures in the policy review, the RBI refrained from giving its estimate on both growth and inflation, saying things are fluid and rapidly changing.

Coronavirus Outbreak GDP likely contract by 45 in AprJun quarter will grow by just 2 in 202021 says ICRA

Representational image. Reuters.

The Indian economy was already supposed to clock a decadal low growth of 5 percent in 2019-20, according to official estimates, and the coronavirus-related worries have only compounded the problems.

"Regardless of the measures announced now by the RBI, we are lowering our base case scenario for GDP growth to (-)4.5 percent for Q1 FY2021 and to 2 percent for FY21," ICRA said in a note on Friday.

They said the estimate is guided by the rapidly growing uncertainties over the duration of the impact of coronavirus on economic activity in India and the rest of the world.

Click here to follow LIVE updates on coronavirus outbreak

The RBI's policy measures got welcomed as a set of "comprehensive announcements" by the agency.

"The combination of moratoriums, liquidity enhancing measures and the sharper-than-hoped-for repo rate cut will help to assuage the markets in these increasingly unsettled times, and offer some protection against widespread defaults, even though the actual impact on boosting economic activity may be limited," it said.

A slew of analysts have been downwardly revising their growth estimates following the outbreak of the coronavirus pandemic in India and also a host of developed countries.

India has been placed under a three-week lockdown till mid-April, which has chilled virtually all the economic activity.

Updated Date:

also read

China eases controls, gives no sign when 'zero COVID' ends
World

China eases controls, gives no sign when 'zero COVID' ends

China is the only major country still trying to stamp out transmission while the United States and others relax restrictions and try to live with the virus that has killed at least 6.6 million people and infected almost 650 million

Explained: What's next for China after mass COVID-19 protests?
World

Explained: What's next for China after mass COVID-19 protests?

Anger against China's strict COVID-19 restrictions have led to public protests in China like never before. Though there will be pressure on authorities to change, how this will be achieved is hard to predict

China COVID-19: People intensify protest against stringent lockdowns as govt tries to tackle sharp rise in cases
World

China COVID-19: People intensify protest against stringent lockdowns as govt tries to tackle sharp rise in cases

Chinese social media and Twitter have many videos of public protests, including a mass demonstration in Shanghai where people in a rare display of anger shouted slogans against the ruling Communist Party of China (CPC) and President Xi Jinping