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-9% GDP forecast for India: COVID-19 impact | BOOM

Sep 12, 2020 00:00 IST

Rating agency CRISIL has revised its real GDP forecast for FY 21 from -5% to -9%. The reasons are still the ongoing COVID-19 pandemic and resultant hit on economic activities due to the lockdown as well as limited fiscal support from the government. The permanent loss to India's GDP is 13% vs 3% for rest of Asia-Pacific economies. How much can a growing agriculture sector compensate in the formal and informal economy? BOOM Explains. DK Joshi, Chief Economist, CRISIL, says overall, a falling GDP will result in more pressure on corporate sector and generation of employment will become difficult. All the problems that would have existed at the previous estimate of -5% will get amplified at -9%. He also maintains that the more coronavirus cases rise and more restrictions continue to stay in place, the buffers in our economic system will erode. The ability of the system to cope up with the crisis in terms of providing income support and fiscal support come down. It also means the government's ability to tax revenue will reduce. Watch BOOM's Govindraj Ethiraj interview DK Joshi on the impact of COVID-19 on the Indian economy and how an already weak economy will struggle due to weak consumption and investment.