Mumbai: The severe dent in the economic activity due to the coronavirus pandemic led rating agency Crisil to sharply cut its growth estimate for 2020-21 to 3.5%, on Thursday. Earlier, the agency had predicted an economic growth of 5.2% for the next financial year.
The country has been placed in a 21-day lockdown since Wednesday as authorities try to restrict the spread of coronavirus and minimise the number of infected cases. Currently, 13 people have succumbed to the virus and over 650 infected.
"The pandemic in India and the consequent lockdown for 21 days pose a material risk to our India economic outlook. The adverse effects that will follow can dwarf the gains from the sharp drop in crude oil prices, and the anticipated monetary and fiscal stimuli," it said.
The agency said the pandemic's cost is not only restricted to financial one like the post-Lehman Brothers crisis of 2008, but it also involves enormous human suffering that has not been witnessed in decades. Crisil Chief Economist Dharmakirti Joshi said the estimate of 3.5% growth in 2020-21 assumes a normal monsoon and also a subsidising of the pandemic's economic impact in the June quarter.
"The slump in growth will be concentrated in the first half of the next fiscal, while the second half should see a mild recovery," he said. Social distancing and discretionary spends will be hit in the June quarter, it said adding that sluggish growth in advance economies will also hit Indian exports.