Economy

Covid-19 lockdown estimated to cost India $4.5 billion a day: Acuité Ratings

Our Bureau Mumbai | Updated on April 02, 2020 Published on April 02, 2020

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It would take at least 2-3 months to restore the industry supply chain completely in the domestic market, the report

Indian economy is expected to lose over $4.5 billion every day of the lockdown and around $100 billion during the 21 day nationwide lockdown period, according to Acuité Ratings.

As a result, the overall GDP growth for FY21 is estimated to be in the band of 2-3 per cent, which takes into account a significant economic revival in H2FY21. “The services that are hugely impacted are transport, hotel and restaurant and real estate activities that account for around 22 per cent in GVA. We are expecting around 50 per cent loss in these sectors in Q1 of FY21," Acuité Ratings said in a statement.

Agricultural sector, which accounts for 15 per cent of GVA, will be relatively less impacted as crop harvesting and food distribution activities will continue; however, livestock and fishery segments are to witness mute demand and lower the sector’s average 3.5-4 per cent growth.

Risk of prolonged disruption

“While the countrywide shutdown is scheduled to be lifted from April 15, 2020, the risks of a prolonged disruption in economic activities exist depending on the intensity of the outbreak. Clearly, it will be an understatement to say that the ongoing disruption will have a severe economic consequence across the world and also in India. IMF along with many other agencies have already forecast a recession for the global economy in CY20. The short term growth outlook for the Indian economy particularly in H1FY21 appears grim,"it added.

“We believe that it would take at least 2-3 months to restore the industry supply chain completely in the domestic market, even if the lockdown is limited to 21 days. There are further risks of local lockdown in various regions of the country depending on the extent of the outbreak in those areas and partial disruption in economic activities till H1FY19 is a realistic scenario," the rating agency said.

On the positive side, a quick recovery in the domestic economic activities is likely in H2, which may in turn benefit from the fiscal and monetary measures along with lower global oil prices.

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Published on April 02, 2020
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