CRISIL estimates GDP growth of 1.8 per cent for FY21

The domestic rating agency, CRISIL has slashed India's gross domestic product (GDP) estimates to 1.8 per cent for FY21E while, projecting total losses of Rs 10 lakh crore or Rs 7,000 per person owing to lockdowns to control COVID-19 pandemic. The agency believes that the lockdown is showing a disastrous impact on the economy and could lead to a permanent loss of GDP, unemployment and poverty, despite relief packages. Besides, earlier, it had estimated a GDP growth of six per cent for FY21E, which was last revised to 3.5 per cent in late March.

The agency said that the economic growth forecasts are premised on a normal monsoon, stiff fall in oil prices lending a helping hand and the effect of pandemic subsiding in the first quarter of the fiscal year. The risk factors include a dip in global growth, restrictions continuing in India and the second wave of cases emerging up.

Furthermore, it stated that with the threat of infections still looming, the policymakers are grappling with a dilemma right now on whether to extend the lockdown beyond May 3, which would entail economic costs. There is also a worry of a burst out in infections if the social distancing norms are not followed. It added that if the norms are followed strictly, there will be reverses on the economic activity.