The Central Government has offered guidelines to be followed during the nationwide lockdown which will be extended until May 3. It’s no secret that the economy doesn’t quite function when a full lockdown is imposed, so how is India doing in the midst of all this? Not very well.
“We think a precautionary increase in savings and reduction in discretionary consumption, especially on travel and recreational services, will weigh on growth rates longer. This drives the downward revision in our growth recovery outlook to show a shallower pick-up in Q3,” Barclays Research said in its note.
Read - Bandra Gathering: Mumbai Police Registers Three FIRs, Journalist Detained For Spreading MisinformationAs a result of these predictions, Barclays has estimated zero GDP (Gross Domestic Product) growth for the year. Additionally, the research firm mentions that the country could see losses of up to $234.4 billion or 8.1% of the national GDP.
Economists have also mentioned that the economy will not magically recover when the lockdown is lifted. This is primarily due to the fact that many will be unwilling to walk into crowded places, especially in metropolitan areas like Mumbai and Delhi where the impact of COVID-19 has been the worst. Other factors could include social distancing norms, which will likely continue even beyond the lockdown.
The lockdown has resulted in factories running at lower capacities than usual, while customers’ spending power has also decreased due to lay-offs, salary cuts, and a number of other factors.