The Barclays report further stated that the lockdown implemented across the country began to decline in June and some indicators such as power and fuel consumption and freight began to normalize at a slower pace. It is estimated that India’s growth is unlikely to return by the December quarter. Although April and May were the worst months on the economic front, the increasing cases of coronaviruses and the lockdown imposed by many states at their own level have once again placed barriers in front of better indicators. This has caused concern that the return of activities may be relatively short-lived.
Growth may fall 8% in December quarter
Barclays has slashed the GDP estimate for the December quarter, given the uncertainty facing businesses and industries. Barclays estimates that GDP will fall by 8 per cent in the December quarter and 6 per cent in the entire financial year. In the case of sectors, Barclays said that in the first quarter, construction would fall by 48 percent, trade and commerce by 40 percent, manufacturing by 45 percent and financial services by 20 percent. However, the availability of COVID 19 vaccine and the number of pandemic cases will determine the economic situation for the rest of the year.
GDP growth to remain at 4.5% in FY21: RBI
At the same time, the Reserve Bank has predicted that India’s GDP growth can be (-) 4.5% in the financial year 2020-21. Regarding global growth, RBI estimates that it can be (-) 6.0% per cent in single hit cinereous and (-) 7.6% in double hit cinereous. The RBI says that the manufacturing and mining sectors could suffer a loss of up to Rs 2.7 lakh crore due to loss of income (capital and labor) from the 68-day lockdown.
The Reserve Bank on Tuesday presented the annual report for 2019-20. In a part of it ‘Assessment and Prospects’, RBI has said that deep and comprehensive reforms are needed to return India to the path of sustainable growth amid the COVID-19 epidemic. The central bank has warned that the potential growth rate of the country will come down due to this epidemic. The COVID-19 epidemic has severely broken the global economy. The size of the global economy in the future will depend on how the spread of this epidemic is, how long this epidemic lasts and how long the vaccine comes for its treatment.
Deep and extensive reforms needed
The Reserve Bank further said that one thing that is emerging is that after COVID-19 the world will change and a new ‘normal’ will emerge. Deep and extensive reforms will be needed in the post-pandemic scenario. Extensive reforms will be required from the product market to the financial market, legal framework and international competition front. Only then can you overcome the decline in growth rate and take the economy on the path of strong and sustainable growth with macroeconomic and financial stability.
The Reserve Bank said that like the rest of the world, the prospects of possible growth in India will be weak. In the post-COVID-19 scenario, it would be difficult to sustain the growth achieved by the stimulus package and regulatory concessions as the incentives would then go away. The RBI says that the improvement in the economy will also be different. The global financial crisis came after several years of rapid growth and macroeconomic stability. At the same time, COVID-19 has given a shock to the economy, while it was growing at a sluggish pace for the last several quarters.