The second most populous country in the world is currently under lockdown due to the spread of coronavirus. But the lockdown has come with a high cost for India as the country’s economy continues to plunge. According to Reuters polls, the Indian economy is likely to witness its worst quarter in 25 years. The poll predicted the economy expanded at an annual pace of 3.0% last quarter but will shrink 5.2% in the three months ending in June, which is far weaker than expectations in a poll published last month for 4.0% and 2.0% growth, respectively.
The Reserve Bank of India cut its deposit rate again.
The coronavirus pandemic is continuing to spread the country as 1.38 billion people in the country are under lockdown. In an emergency meeting last week, the Reserve Bank of India cut its deposit rate again after reducing it on March 27 and lowering the main policy rate by 75 basis points. The central bank of India also announced another round of targeted long-term repo operations to ease liquidity. The Indian government earlier announced a package of 1.7 trillion rupees ($22.3 million) in March to cushion the economy from the initial lockdown, but the lockdown was later extended till May 3.
Economists predict a recession this year.
Even with stimulus measures, 40% of economists, or 13 of 32 that provide quarterly figures, are predicting an outright recession this year. According to the latest poll, the economy recovering again slowly in the July-September quarter, growing 0.8%, then 4.2% in the third quarter of this year and 6.0% in the final quarter of the fiscal year, in early 2021. Upasana Chachra, the chief India economist at Morgan Stanley, said that a rebound in economic activity following the disruption is expected, but the low starting point of growth implies a slow recovery. The impact of lockdown on the economy is already visible and not just in India all around the world.
The unemployment rate in India rises to 23.8%.
Since the lockdown started on March 25, the unemployment rate in the country has tripled to 23.8%, according to the Centre for Monitoring Indian Economy, a Mumbai-based research firm. According to the Reuters report, economists asserted that the RBI would follow up with more easing, including lowering the repo and reverse repo rates and expanding the new long-term loans program.
At the time of writing, there have been 21,700 confirmed COVID 19 cases in the country, and 681 people have lost their lives. Currently, all over the world, there are 2.6 million people infected, and over 183,000 people have lost their lives. The impact of the coronavirus pandemic on the global economy has been devastating. Earlier, the World Trading Organisation predicted that the global trade for this year might fall down up to 32%. The WTO also noted that forecasting how the world economy will look like in 2021 or 2022 remains difficult.
