Limited Period Offer:Be a PRO for 1 month @Rs49/-Multiple payment options available. Know More
you are here: HomeNewsIndia

Coronavirus impact | India's GDP may contract by 6.4% in FY21: Care Ratings

It said given that the India is into a lockdown for July too with several restrictions on resumption of services in particular as well as movement of people, the cutoff date for normalcy will spread into the latter part of the Q3 and more likely to Q4.

July 02, 2020 / 04:16 PM IST
Representative Image

Representative Image

Due to the COVID-19 induced lockdown, Care Ratings on July 2 revised India's GDP growth forecast for the current financial year to (-) 6.4 percent as economic activity continues to be under restriction. The rating agency, in May, had projected a decline in GDP growth of 1.5-1.6 percent in FY21.

It said given that the nation is into a lockdown for July too with several restrictions on resumption of services in particular as well as movement of people, the cutoff date for normalcy will spread into the latter part of the third quarter and more likely to the fourth quarter.

"Under these assumptions our forecast for GDP growth is now (-) 6.4 percent for FY21 with GVA (de)growth estimated to be around (-) 6.1 percent,” Care Ratings said in a report.

Coronavirus India News LIVE Updates

The sharper fall in real GDP also means that the nominal GDP for the year will also decline assuming inflation of 5 percent which in turn will affect the projected fiscal deficit number of the central government which will be in the region of 8 percent for FY21, it said.

Close

COVID-19 Vaccine

Frequently Asked Questions

View more
How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

View more
Show

In FY20, the country's economy grew at an estimated 4.2 percent, almost a decade low.

It, however, said the positive growth will come from only agriculture and the government sector.

The agency's May estimate for a decline in GDP growth of 1.5-1.6 percent was based on the assumption that the lockdown would be ending by the month-end and that the recovery process will be gradual and be calibrated across sectors with the second half being closer to normal.

GDP forecasts for FY21 are unique as they would be varying depending on the evolving situation and the assumptions being made on the recovery process in the country, the report said.

The agency said its assumption now is that two-third of the economic sectors would broadly be operating at 50-70 percent capacity by the end of third quarter and the balance may not even reach this state this year.

Services like hospitality, tourism, entertainment, travel would take a much longer time pan India to resume anywhere close to normal with interstate restrictions being the norm for the next quarter or so, the report said.

"The restriction on movement of people translates into fall in demand for goods and services and further exacerbates the low-consumption growth syndrome that pervaded for three years now,” it said.

Job losses and pay cuts will add to the stickiness in spending even during the festival time, the agency said adding, “It is assumed that good rural income cannot compensate for this loss of purchasing power which is topped with uncertainty.

Follow our full coverage of the coronavirus pandemic here.
PTI
first published: Jul 2, 2020 04:00 pm

stay updated

Get Daily News on your Browser
Sections