Crisil cuts FY21 growth estimate to 3.5% for India

27 Mar 2020 Evaluate

Rating agency Crisil has cut its growth estimate for India to 3.5 percent for next financial year (FY21) amid severe dent in the economic activity due to the coronavirus pandemic. The agency said the estimate of 3.5 percent growth in 2020-21 assumes a normal monsoon and also a subsidising of the pandemic's economic impact in the June quarter. The slump in growth will be concentrated in the first half of the next fiscal, while the second half should see a mild recovery. Earlier, the agency had predicted an economic growth of 5.2 percent for the next financial year.

Further, the agency welcomed the Rs 1.70-lakh crore package announced by Finance Minister Nirmala Sitharaman but said more measures like loan forbearances for small businesses and households are necessary.  The country has been placed in a 21-day lockdown as authorities try to restrict the spread of coronavirus and minimise the number of infected cases. Currently, 13 people have succumbed to the virus and over 650 infected.  The agency said the pandemic's cost is not only restricted to financial one like the post-Lehman Brothers crisis of 2008, but it also involves enormous human suffering that has not been witnessed in decades.

Besides, it said even though services, which account for 41 percent of the total exports, have been resilient so far, the impact in advance economies will hit Indian IT and tourism sectors and dent export earnings. It also said that the ongoing lockdown is affecting manufacturing activity and also services and, in turn, affecting the domestic supply chains. It added that daily wage earners will be in the firing line.

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