India’s economy was already going through a bad phase and then we were all shook by a pandemic. The nation’s economy is at stake, we are witnessing downfalls from every corner. And the forecasts from several rating agencies have the recession confirmed this fiscal.
Rating agencies predict big contractions in GDP this fiscal year
Crisil, this Tuesday, said that they have evaluated a contraction of 5% in the Indian economy this fiscal whereas SBI Research has deduced the FY21 GDP to shrink by 6.8%.
The foreign research house, Goldman Sachs has also speculated the GDP for FY21 to dwindle down by 5%.
Talking about the first quarter of this fiscal year, Crisil has projected a contraction of 25% and SBI has claimed an even sharper fall, that is, by 40%. And again, according to Goldman Sachs, the contraction in Q1 might approach a huge 45%.
Agriculture sector: a tiny hope for Indian economy
After all the predictions made by rating agencies, the economic package doesn’t seem to be an aid for boosting India’s economy for the next three fiscals. Rather the extending lockdowns and locked supply chains only head to worsening the situation.
The approaching recession will be the first in the past 40 years and the fourth one since Independence. Before this, only three recessions have been encountered by India respectively in the fiscals 1958, 1966, and 1980. All were the consequences of unfavorable monsoon which took the agriculture sector, which accounts for 17% of the total GDP, down and breached the economy’s major pillar.
However, the forthcoming recession is largely arriving from the non-agricultural sectors such as education and tourism. Moreover, the pandemic being global has closed every opportunity left for India on the exports front. And this time, we are only hopeful about the agriculture sector provided that the monsoon comes anticipated. However, even if the conditions stay ideal, that is, the agriculture industry contributes a growth of 2.5%, non-agricultural GDP would still contract to 6% concluding a -ve overall.
All the major cities and states are falling under red zones giving constant hits to the economy. Without the hasty COVID-19 pandemic, a growth of 0.8% was projected for 2020-21. Nonetheless, 10% of GDP in real terms now could be permanently lost. Hence, there goes a long way to recovery and appears no growth rate to be occurring for the next three fiscals.