Since Independence, it is the fourth recession India is facing. This is also the first since liberalization. On Tuesday, CRISIL said that this is the worst of all the recessions the country has faced. It predicted that the economy will shrink by 5% due to the coronavirus in the current fiscal year
While assessing the country’s GDP, CRISIL said that the first quarter of this fiscal year, which is from April to June will see a massive drop of about 25%. In real terms, about 10% of the GDP will be lost permanently, by the country. So, whatever the growth rates the country has seen before the pandemic is very unlikely for the country to achieve.
In the past, India has only ever faced a recession three times according to the available data. It is during 1958, 1966, 1980 fiscal years. All those years the recession has occurred due to the rainfall hitting the agriculture heavily and it impacted the economy of the county.
CRISIL said that this current recession could be different as the agriculture looks to soften the blow with normal crop yield expected due to the normal monsoons. The lockdown in the country, due to the coronavirus has been implemented from March 25 and will be there until May 31. This had a huge impact on economic activity in the country.
According to CRISIL, the first quarter is the one which is greatly affected due to the recession. Non-agriculture sectors like education, travel, tourism are some of the sectors greatly impacted with this recession and will show an effect on the upcoming quarters as well. The jobs and incomes of the people working in these sectors will see a heavy loss.
According to the stats, industrial production has fallen over 16% this quarter, exports reduced by 60%, and new telecom subscribers have been reduced by 35%. According to CRISIL, April month could be the worst of all in this fiscal year.
S&P Global had issued numbers that say that one month of lockdown implemented in the country will reduce the annual GDP by 3% on an average in the Asia-Pacific region. CRISIL forecasts that India’s GDP will fall by 5% in the 2021 fiscal year. This could be helped a little bit by the agriculture which could see an increase of 2.5%
The government had announced an economic relief package of Rs.20.9 lakh crores which could soften the blow of the recession in the short term.