The outbreak of COVID -19 has in every sense has wreaked havoc in the economic conditions of the country. CRISIL on Tuesday said that India’s fourth recession since Independence, the first since liberalisation and perhaps the worst to date, is here.
It also predicted that the economy to shrink by 5 percent in the current fiscal because of the lockdown.
“The first quarter (April to June 2020) will suffer a staggering 25 percent contraction. About 10 percent of gross domestic product (GDP) in real terms could be permanently lost. So going back to the growth rates seen before the pandemic is unlikely in the next three fiscals,” it said in its assessment of India’s GDP.
In the past 69 years, India has seen a recession only thrice – as per available data – in fiscals 1958, 1966 and 1980. The reason was the same each time – a monsoon shock that hit agriculture, then a sizeable part of the economy.
CRISIL said the recession in the current fiscal (April 2020 to March 2021) is different as agriculture could soften the blow this time by growing near its trend rate, assuming a normal monsoon. The coronavirus lockdown, first imposed on March 25 and extended thrice till May 31, has curtailed economic activity severely. “The first quarter of this fiscal will be the worst affected,” it said.
It also saw economic activity in states with high COVID-19 cases suffering prolonged disruption as restrictions could continue longer. Stating that the economic costs now beginning to show up in the hard numbers are far worse than initial expectations, it said that industrial production for March fell by over 16 percent, exports contracted 60.3 percent in April, and new telecom subscribers declined 35 percent, while railway freight movement plunged 35 percent on-year.