COVID-19 impact: in Economy GDP, Bank,Real estate,Agriculture,automobile & forecast

COVID-19 impact: in Economy,But good news for India 

Its such a vague economy forecast for the Indian economy that the RBI even refuses to give the growth projection. & not only central bank but also MOODY's to GOLDMAN SACHS to IMF is giving us a picture of gloom & doom.
as per MODDY's report

Indian GDP will be Slashed by 2.5% in 2020 

Moody’s Investors Service sharply cut India’s growth forecast for calendar 2020 to 2.5% from 5.3% estimated barely 10 days ago after the government ordered a nationwide lockdown to curb the spread of the coronavirus. The rating company estimates a 5% growth for calendar 2019.

as per Goldman Sachs report

Goldman Sachs on Wednesday put out the bleakest FY21 growth forecast for India at 1.6%, down from 3.3% previously, holding that the spread of the Covid-19, announcements of a nationwide shutdown, social distancing measures and fears among consumers and businesses may lead to a significant contraction in economic activity.
So far Fitch Ratings and ICRA Ltd had pegged India’s FY21 growth at 2% while S&P and Moody’s have projected India to grow at 3.5% and 2.5% respectively.
& these figures might even deteriorate if the Modi government is forced to extent this lockdown.  
NOW in this situation, my( the author) Question is

will India be able to overcome the current COVID-19 crisis the way it did in 2008?

 according to former RBI Governor Raghuram Rajan The Indian economy is facing great danger since its independence. the reason behind this is that the decade of the recitation was overcome eventually because businesses kept running unlike now where all business activity has come towards a standstill.

COVID-19,GDP,ECOMONY AFTER LOCKDOWNThe chief economist of IMF , Gita Gopinath wrote in a Blogspot

The economic slowdown in India was the primary reason behind global growth estimates being downgraded in the latest World Economic Outlook,
We have projected global growth at 2.9 per cent for 2019 and 3.3 per cent for 2020, which is 0.1 percentage point lower than the October estimates. The vast majority of it comes from our downgrade for India which was quite significant for both years,

Sectors impacted by the lockdown 

1. Agricultural sector


  • contributes nearly $265 billion to Indian GDP( total $ 2.97 trillion)
  • which employed 60% of workforce of the country
COVID-19 is disrupting some activities in agriculture and supply chains. Preliminary reports show that the non-availability of migrant labour is interrupting some harvesting activities, particularly in northwest India where wheat and pulses are being harvested. There are disruptions in supply chains because of transportation problems and other issues. Prices have declined for wheat, vegetables, and other crops, yet consumers are often paying more. Media reports show that the closure of hotels, restaurants, sweet shops, and tea shops during the lockdown is already depressing milk sales. Meanwhile, poultry farmers have been badly hit due to misinformation, particularly on social media, that chicken is the carriers of COVID-19. which will enough to damage the rural economy cycle.
Now come to other point

2. Real estate

  • contributes nearly $297 billion to Indian GDP( total $ 2.97 trillion)
  • which employed 50  million people in the country 
the impact of the crisis can be a double whammy. The sector, especially the residential segment, has already been struggling with project delays, regulatory changes and low sales for the last few years.
The quantum of impact will depend on how long the lockdown will last and how long the economy will take to get back on track. Many experts said that the situation may deteriorate into a recession similar to what we saw in 2008, if not worse. Around 42% of the respondents believe that the next six months will be one of the worst phases in terms of new supply additions across the major office markets in the country. More than half of respondents expect that leasing activity will remain well below par during this period. Their outlook on future rental appreciation also dipped in during the quarter as 50% of the stakeholders expecting rents to either remain stagnant or slide under the current uncertain economic scenario.

3.Automobile sector

  • contributes nearly $207.9 billion to Indian GDP( total $ 2.97 trillion)
  • which employed 14  million people in the country
the production of automobile sector is on hold in 2 major auto cluster In India. According to CARE ratings in FY 20 the column will be decline by 15% -20%.
The slow down of auto & Real estate sector will directly hurt the steel manufacturing sector in India. factories are running in very low capacity due to the shortage of staffs. 

3.banking sector


according to Moody’s on Thursday revised the outlook for the Indian banking system to negative from stable, citing disruptions in economic activity caused by the COVID-19 outbreak and an ensuing decline in asset quality.
It said asset quality will deteriorate across corporate, small and medium enterprises (SME) and retail segments, leading to pressure on profitability and capital for lenders. While funding and liquidity at public sector banks (PSBs) will be stable, Moody’s said, the growing risk aversion in the system following the Yes Bank default will increase funding and liquidity pressure on small private-sector lenders.
“A deterioration of global economic conditions and a 21-day lockdown imposed by the Indian government in an effort to slow the spread of coronavirus will weigh on domestic demand and private investment," it said, adding that credit supply to the economy will be hampered by volatility in global financial markets and heightened risk aversion among Indian banks and debt market participants.
how will this impact Masses?

well CII did a snap poll on 200 CEO in across India in which they said that their revenue will fall at least by 10%.
52% of CEO  anticipates job loses in their sector.

where before COVID 19 unemployed rate was the highest in 45 years. 
now this is the current situation:-

Now, what measure to be taken to soften the COVID-19 blow?
 :-IMF chief economist Gita Gopinath wrote in a Blogspot
Multilateral cooperation is vital to the health of the global recovery. To support needed spending in developing countries, bilateral creditors and international financial institutions should provide concessional financing, grants, and debt relief. The activation and establishment of swap lines between major central banks has helped ease shortages in international liquidity, and may need to be expanded to more economies. Collaborative effort is needed to ensure that the world does not de-globalize, so the recovery is not damaged by further losses to productivity..

 Nobel laureate Abhijit Vinayak Banerjee has a simple policy prescription for India as its economy shrivels under the impact of the coronavirus crisis: Print money liberally and transfer cash directly to the sections of society that need it most. 

Does printing more money save our economy?
 click to read

Worst crisis since the great depration


But there is a good news:-

Indian Economy could fare better than other countries

  1. India is less dependent on export.
  2. India won't suffer if globalisation put on reverse gear and new trade barriers are imposed.
  3. India's biggest import is crude oil. plummeted oil prices played critical role in saving India from external shock.
  4. Most of the economists are thinking to see a "V" shape graph after lockdown close.
let hope for the best & please maintain social distancing during the lockdown

About Commerce Now

Hi, Myself CMA(semi qualified Cost Accountant) Mousam Roy having more than 5 years experience in commerce field,teaching field as well as professional field with working with PSU and big Firm.


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