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How Economy take further hit after likely 5% contraction, 10% permanent GDP loss if these risks materialise?any idea

economy

India’s GDP is likely to contract by 5 per cent. Along with this a 10 per cent permanent loss to the economy is anticipated by the ratings agency Crisil.

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A further deteriorating impact is expected if three key risks materialise says Ashu Suyash, MD and CEO, Crisil. First, more than 2.4 percent decline in global GDP as reported by S&P Global for 2020 and second, detrimental condition of agriculture sector because of any deviation in normal rainfall and finally the third, a second wave of Coronavirus cases which would further increment the uncertainty and stringency. All this was reported by Suyash.

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GDP

It is ascertained that before pandemic levels of the gross domestic product would not be possible in the next three fiscals despite policy support because to catch-up the world would need atleast an average GDP growth to increase to 11 per cent over the next three fiscals which has never happened before in the history of world economics.

The stimulus and relief package announced by BJP led Central Government is expected to positive outlook worth Rs 11 lakh crore. Out of the total, nearly 65 per cent would be in the form of liquidity and credit support. “We therefore, believe that sans strong fiscal stimulus – which we don’t foresee – recovery is unlikely to be a V-shaped one,” said Suyash. GDP contraction and risk averseness which is anticipated this year are likely to keep credit growth below levels, even after the repo rate cut by the Reserve Bank of India, which was cut by 0.4 per cent to 4 per cent along with the reverse repo rate that was reduced to 3.35 per cent.

 

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