“Bhakts will start boycotting Barclays now,” joked liberal Twitterati after the UK-based brokerage firm published a report forecasting 0.8% GDP growth in India for FY21. According to the report titled ‘A deeper and longer slowdown’, the figure was revised from its earlier projection of 3.5%, after the lockdown was extended till May 3. Given the deteriorating global backdrop and the negative impact of the shutdown on mining, manufacturing and utility sectors, GDP growth forecast for CY21 has also been lowered to 7.5% from 8.0% previously. Barclays has estimated economic loss of $26 billion per week amounting to total loss of $234.4 billion. That makes up for 8.1% of India’s GDP. This downward revision is largely due to the higher-than-expected output loss in agriculture, construction, wholesale and retail sectors. With power generation, freight movement and fuel consumption also taking a blow, industrial states such as Maharashtra, Delhi, Tamil Nadu and Punjab will feel a major impact to their state coffers. States such as Kerala, Karnataka and Haryana will see a smaller impact in terms of capital but Barclays cautions that lower consumer spending might hurt their growth rates in the current fiscal. Once the lockdown is over, Barclays expects the pace of recovery to be dependent on policy support. “Major policy interventions, if taken, could change the outcome and bring about a faster upswing,” the report mentions. But critics remain sceptical considering the State’s handling of the sudden lockdown and poor management of the migrant labour crisis.
Land of no growth
The lockdown extension may have been crucial, but the collateral damage to India’s GDP will take its own time to repair
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