{"id":21426,"date":"2020-03-21T17:02:16","date_gmt":"2020-03-21T11:32:16","guid":{"rendered":"https:\/\/kashmir.today\/coronavirus-outbreak-will-set-back-indias-growth-recovery\/"},"modified":"2020-03-21T17:02:16","modified_gmt":"2020-03-21T11:32:16","slug":"coronavirus-outbreak-will-set-back-indias-growth-recovery","status":"publish","type":"post","link":"https:\/\/kashmir.watch\/?p=21426","title":{"rendered":"Coronavirus outbreak will set back India\u2019s growth recovery"},"content":{"rendered":"\n

Source: <\/strong>Economic Times<\/a><\/p>\n\n\n\n

NEW DELHI:<\/strong> India\u2019s economic growth could take a hit of up to half a percentage point in FY21 because of the disruptions caused by the Covid-19 outbreak, early estimates by the government suggest. But independent economists see a deeper cut of up to one percentage point.
\u201cThere will be a hit of 0.3-0.5% on the GDP in the next fiscal year,\u201d said one of the officials aware of the estimate.<\/p>\n\n\n\n

\u201cGrowth in the first two quarters of the next fiscal could be as low as 4-4.5%,\u201d another official added.
The economy is forecast to grow 5% in current fiscal, the slowest in 11 years. The Economic Survey had forecast 6-6.5% rise in FY21, but Covid-19 has hurt recovery prospects.<\/p>\n\n\n\n

Prime Minister Narendra Modi has asked top verticals within the government, including the Niti Aayog, the Economic Advisory Council to the PM and finance ministry to assess the economic impact of the novel coronavirus.
\u201cIndia is relatively insulated from the global value chain and to that extent impact on India will be less,\u201d Reserve Bank of India governor Shaktikanta Das said on Monday. \u201cBut India is integrated into the global economy, so there will be some impact.\u201d Independent experts have called for fiscal and monetary stimuli.<\/p>\n\n\n\n

FIRST HIT ON SERVICES<\/strong>
Sectors such as tourism, aviation, hospitality and trade will face the first brunt of the severe travel, assembly and activity curbs imposed by the governments across the world, followed by a wider impact on other sectors as economic activity stalls.<\/p>\n\n\n\n

Moody\u2019s has downgraded India\u2019s growth to 5.3% in 2020 due to downside risks of Covid-19. \u201cBy first quarter in the next fiscal, we can definitely see a shaving off of at least half a per cent of GDP, which could go up to 1% depending on how much it permeates through the economy,\u201d said Madan Sabnavis, chief economist at CARE Ratings, pencilling in 5.5% growth for FY21.
DK Srivastava, chief policy adviser at EY, said the impact would be limited to a 0.5 percentage point downward revision in the current and next quarter if the situation was contained within a month. However, if it dragged on till May, then GDP growth in FY21 could dip to 4%, he said.
The \u201csupply side contagion effect\u201d will impact manufacturing, agriculture and the pharmaceutical industry, said Bornali Bhandari, an economist at the National Council of Applied Economic Research.
Sectors such as consumer durables, automobiles and pharmaceuticals will feel the brunt of supply constraints.
\u201cOn top of the likely consumption slowdown, production is also going to be hit,\u201d said DK Pant, chief economist at India Ratings and Research. In the current situation, \u201cno one is going to pile up inventories\u201d.
According to Sabnavis, banks will also have to be wary of a rise in non-performing assets (NPAs). If the shutdown on travel and malls continues for a month or more, a zero-revenue situation will definitely impact the ability to service loans, he said.<\/p>\n\n\n\n

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SOME PROTECTION<\/strong>
China, where the coronavirus began, is likely to see a contraction in GDP in the first quarter of 2020 \u2014 the first contraction since 1998. The US and Europe are expected to slip into recession by July, dragging down overall growth.<\/p>\n\n\n\n

India may not suffer as much, given that it has a smaller exposure to the global economy \u2014 exports of services and goods are only a fifth of the total economy. Lower oil prices will provide a cushion, boosting government revenue and creating room in household budgets.<\/p>\n\n\n\n

\u201cThe correction in the CPI inflation in January 2020 has anyway opened the door for a rate cut in the next policy meeting,\u201d said Aditi Nayar, principal economist at ICRA, adding that modest transmission could weaken its impact.<\/p>\n\n\n\n

Monetary and fiscal policy will both be unable to arrest the slowdown but could reduce its intensity, said Sabnavis, citing the muted impact the Federal Reserve\u2019s rate cut had on the US and global markets.<\/p>\n\n\n\n

Srivastava suggested a 25-basis-point reduction in the repo rate. \u201cThe government should relax the fiscal deficit by another 25 basis points of GDP and direct the funds towards the health sector, since it is beneficial in the long run,\u201d he added.<\/p>\n\n\n\n

(This story has not been edited by Kashmir Today staff and is published from a syndicated feed.)<\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Source: Economic Times NEW DELHI: India\u2019s economic growth could take a hit of up to half a percentage point in FY21 because of the disruptions caused by the Covid-19 outbreak, early estimates by the government suggest. But independent economists see a deeper cut of up to one percentage point.\u201cThere will be a hit of 0.3-0.5% […]<\/p>\n","protected":false},"author":1,"featured_media":23590,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[],"class_list":["post-21426","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-union-territory"],"_links":{"self":[{"href":"https:\/\/kashmir.watch\/index.php?rest_route=\/wp\/v2\/posts\/21426","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/kashmir.watch\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/kashmir.watch\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/kashmir.watch\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/kashmir.watch\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=21426"}],"version-history":[{"count":0,"href":"https:\/\/kashmir.watch\/index.php?rest_route=\/wp\/v2\/posts\/21426\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/kashmir.watch\/index.php?rest_route=\/"}],"wp:attachment":[{"href":"https:\/\/kashmir.watch\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=21426"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/kashmir.watch\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=21426"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/kashmir.watch\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=21426"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}