Economy

India Inc fears coronavirus to pull down GDP by 50 bps

PTI Mumbai | Updated on March 16, 2020 Published on March 16, 2020

Corporate India is expecting a 0.5 per cent hit on economic growth in FY2020-21 if the coronavirus pandemic lasts longer, pushing up fiscal deficit and creating more bad loans for the bank, says an industry survey. Care Ratings has conducted a survey on the impact of the coronavirus pandemic on the economy among over 150 CEOs, CFOs, investors, analysts and other stakeholders from manufacturing, financial services, infra, realty and services between March 5 and 12.

According to the survey, the economic impact will be significant and long term if the virus continues for longer.

A vast majority (52 per cent) of those polled say the GDP will come down by around 50 bps, while 22 per cent expected the hit to over 1 per cent in FY21, forcing the RBI to respond by reducing the repo rate by 25-50 bps sooner than later, according to 57 per cent of the respondents.

They also fear a widening of the fiscal deficit if the government announces fiscal measures to support the economy with 70 per cent expecting widening of the fiscal deficit to the tune of 0.25 per cent in FY21.

Significantly, as much as 80 per cent opine that the NPA levels in the banking sector are going to increase owing to the outbreak across.

While the hospitality, tourism and aviation will be hit hard, pharma and healthcare will benefit from pandemic.

As much as 23 per cent of the respondents see hospitality and tourism getting hit badly due to the adverse impact of coronavirus followed by airlines (11 per cent), and auto and auto ancillary (9 per cent).

Some of the other industries, which are expected to benefit apart are retail and e-commerce (4 per cent), BFSI (3 per cent), infrastructure (3 per cent), capital goods (3 per cent) and auto and auto ancillary (3 per cent) among others.

The on the impact on exports, 58 per cent opine that the pandemic will hit exports 42 per cent believe it will lead to a contraction in FY21 and 78 per cent respondents also expect imports also to contract further.

Published on March 16, 2020
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