According to reports, a three-week lockdown in the country due to coronavirus will lead to a sharp decline in GDP growth for the April-June quarter. This will affect the full-year growth. The country will lose about $ 120 billion (Rs 9.12 lakh crore) due to the lockdown. This is equivalent to 4% of total GDP. Keeping this in mind, the estimate of GDP growth has been reduced. According to the report, GDP growth is expected to decrease by 2% this year. After Tuesday’s announcement by Prime Minister Narendra Modi, Barclays Bank has prepared a research report on the impact on the economy.
Barclays India Chief Economist Rahul Bajoria says that the report has been prepared assuming four weeks of complete shutdown and eight weeks of partial closure. The growth forecast has been reduced from 4.5% to 2.5% in 2020 and from 5.2% to 3.5% for the entire financial year (2020-21). But, the growth is expected to increase next year. Accordingly, GDP growth will be 8.2% in 2021 to 8% in FY 2021-22.
The bank had earlier estimated that the RBI would cut interest rates by 65 basis points in view of the possible slowdown but now said that the rate cut would be even higher. The Barclays report said the RBI would cut 65 basis points in the April monetary policy review. The June-August reviews are expected to decrease by 100 basis points. Apart from this, arrangements will also be made to buy bonds and provide more and more cash to banks.