ICRA Ratings has cut India’s Gross Domestic Product (GDP) forecast amid the Covid-19 crisis and expects the economy to grow at just 2% in the current financial year (FY21). It mentioned that the nationwide lockdown announced to contain the coronavirus outbreak has impacted industries and their operations have come to a standstill.
It further said that the Indian economy may witness a sharp contraction of 4.5% (de-growth) during Q4 FY20. It stated the concerns due to Covid-19 have morphed from the impact of imports from China on domestic supply chains, into a domestic and external demand shock, with social distancing and lockdowns leading to production shutdowns and job losses in some sectors.
Besides, the rating agency's vice president and sector head (corporate ratings) Shamsher Dewan said ‘amid uncertainty as to when the situation will normalize, we expect a sharp downturn in various indicators of the manufacturing and services sectors from March 2020 onwards.’ This primarily includes the discretionary activities like travel, tourism and hospitality; labour intensive sectors like construction, transport and manufacturing of non-essential items; exports; and supporting sectors like electricity.
