Bloomberg survey forecast: Indian economy will shrink by 0.4%

Last updated on February 13th, 2023 at 04:30 pm

As per a recent survey, the economists predicted that coronavirus curtailment measures would reduce India’s economic growth by 0.4% for the fiscal year 2020-21. The forecast was released based on the survey conducted by the Bloomberg News. As part of the survey, in which views of 19 economist were recorded from May 6 to 11, the economists highlighted slump in the economy and said that the growth index would take a free fall from the 1.7% expansion seen in April. It was the fourth time the forecast figures got revised.

“There remains uncertainty with respect to the timeframe through which the lockdown may continue,” said Indranil Pan, chief economist at IDFC First Bank Ltd. “Significant areas of the country continue to see increases in infection numbers and opening up the country from the lockdown might not be seamless.”

As the nation gradually moves towards the lifting of lockdown the government has allowed some business and factories to operate, with 30% of work force and social distancing measures in place. The BJP-led central government took the decision of partial lifting of lockdown in certain areas to take the strain off the economy but another situation which was left ignored was lack of workers in the market. Most of the workers have been returning to their rural homes to leave the miserable life in lockdown, where they lived without money and food.

Some believe that the dip in the Indian economy would last for a short-term as once the lockdown restrictions would be lifted, business would start running and would eventually help the economy in reviving.

“For the entire fiscal 2021 we expect growth of 0.8%,” said Hugo Erken, senior economist at Rabobank International told the Bloomberg News. He added, “However, there is a possibility that India has to adopt a ‘social distancing economy’ in order to prevent re-emergence of the coronavirus.”

On Tuesday, PM Narendra Modi announced a Covid relief package of Rs 20-lac-crore, which is said to be equivalent to about 10% of India’s GDP. PM said that the key objective of the economic stimulus package was to create a self-reliant economy and as asked Indians to go ‘vocal over local’.

Read: Changing trends in India-China relations in COVID-19 era

Arun Kumar, an economist and retire professor at Jawaharlal Nehru University, told Newsclick in an interview that the government of India should focus on a wholistic approach, and not only a big stimulus package. He added that the country needs a survival package of economic measures as a mere stimulus package would shoot up the fiscal deficit. He suggested the government to move beyond cash distribution and strengthen the public distribution system to ensure basic supplies to the poor in rural as well as urban areas, else it might lead to food riots.