India’s economic growth could fall to 8.2% if the second wave peaks at the end of June, domestic rating agency CRISIL warned on Monday.
India’s economic growth rate could fall to 8.2 percent if the second wave peak stays at the end of June, domestic rating agency CRISIL warned on Monday, maintaining a baseline estimate of 11 percent in activity.
The agency made it clear that its 11 percent growth forecast risk is “firmly tilted downwards”, and presented two possible scenarios. If the second wave peaks in May-end, GDP expansion will come down to 9.8 percent, and it may go down to 8.2 percent when it peaks at the end of June, it warned.
According to official estimates, the economy declined 7.6 percent in FY 2011 due to the national lockdown. There has been a major reason for the decline in growth projections since the emergence of the second wave, which has affected the healthcare system and has led to localized lockouts across the country.
CRISIL acknowledged that lockdowns are less restrictive right now, but under such measures, the area’s expansion is increasing with the penetration of the virus into rural areas where the healthcare infrastructure is weak.
It states that there will be a story of two growth rates from the first to the current financial year, supporting a base effect despite the outbreak of epidemics by September, while the second half of October-March 2022 will witness better growth.
In the case of an 11 percent increase, the second wave would peak in mid-May and the economy would return to its pre-epidemic level by September 2021, and a permanent loss to the economy was forecast in the medium term estimated at 12 percent, before 11 percent.
The agency said two “gigantic challenges “confront the country, including the spread of the second wave and vaccination. In the past, it was said that while the second wave has been the largest spreader globally, it has also been added that mortality in India is falling as infection increases. Although India ranks lowest among the fully vaccinated population, he said it would be good to provide jabs to half of the population by celebrations in October.
The rating agency maintained its 15 percent revenue growth estimate for India Inc during the fiscal year, stating that the impact of demand is most pronounced for the services sector, than discretionary. Larger companies have more flexibility, stating that the operating profit margins of such players show a better bargaining power.
CRISIL said that about 10 percent of India’s GDP and workforce is the weakest due to growth in cases. In regions, contact-wave services are the weakest, while increased reverse migration may also affect construction activity. It has been said that construction is a highly labor-intensive sector and will be an important watchdog from an employment standpoint, but pointed out that the second wave may be less severe for employment.
Source: Business Standard
