India may have to face unprecedented economic crisis soon

Fears of the huge fall in the GDP growth rate for the second quarter of the current financial year

MAY 18 (WTN) - As you are aware, there has been continuous lockdown in India since March 25 to prevent the spread of the Coronavirus infection. Naturally, due to the lockdown, there has been a long break on economic activities across the country. In such a situation, it is feared that India, the world's second largest population, may have to face an unprecedented economic crisis due to the lockdown.

For your information, let us know that the famous brokerage company Goldman Sachs has expressed fears that the lockdown may cause India to go through the worst recession ever. According to Goldman Sachs, India's GDP growth in the second quarter of the current fiscal year 2020-21 will fall by 45% compared to the earlier estimate of 20%. But there is a strong recovery of 20% in the third quarter.

At the same time, Goldman Sachs has retained growth forecasts for the fourth quarter of the current fiscal and the first quarter of the next fiscal 2021-22 at 14% and 6.5%, respectively.

Let you know that Prachi Mishra and Andrew Tilton, economists of Goldman Sachs, write in a note on May 17, "These estimates mean that real GDP may fall by around 5% in FY 2020-2021 and this recession will be such that India has not yet faced it.”

According to economists at Goldman Sachs, "A lot of fundamental reforms have been announced by the Indian government in various sectors in the last few days. The impact of these reforms may be seen in the medium term in the coming times. But one cannot expect to see the immediate impact of bringing the economy back on track."

In fact, the Government of India has announced further relaxation of restrictions to promote economic activity in certain areas in the fourth phase of the lockdown to revive economic activity even in the face of increasing cases of the Coronavirus infection. At the same time, recently, the Central Government has announced an incentive package of 20 lakh crore rupees to provide relief and increase economic activity in this era of Corona crisis. Let's explain that this relief package is about 10 percent of the GDP of India.

Now, it has to be seen whether after receiving conditional exemption and economic package in the lockdown, a country with a large population like India is able to prevent the possible economic recession. Or even if there is a severe economic downturn, how can the Indian government cope with it?