Corona Virus effects will haunt India’s economy till 2025 say experts.
The Oxford Economics report suggests that India will be one of the worst affected world economies even after the pandemic. The pre-virus output of India was only 12%. The balance sheet that had been building before the corona virus outbreak will most probably intensify.
The economic head of South Asia and SouthEast Asia, Priyanka Kishore forecasts the potential growth of India at 4.5% over the next five years. This figure is lower than the pre pandemic growth of 6.5%.
Ms Kishore further stated “It is likely headwinds are already hampering growth prior to 2020- such as stressed corporate balance sheet, elevated non-performing assets of banks, the fall out in non bank financial companies and labor market weakness will worsen. The resulting long term scars probably among the worst globally, would push India’s trend growth substantially lower from per-Covid levels.”
While the government has come up with piles of measures to support growth they have fallen well short of expectations to boost demands. This is directly leaving all the pressures on the Reserve Bank of India (RBI) to do much of the grunt work.
Last week the RBI published a paper ‘newcast’ where it already predicted that Asia’s third largest economy has already entered a technical recession in the history of the country but the official date to it is still due on November 27.
The International Monetary Fund (IMF) predicts the shrinking of the GDP to 10.3% by March 2021 due to worldwide pandemic followed by imposed lockdown in the nation.
HSBC Holdings plc which is a British multinational investment bank and financial services holding company has said that the potential growth of India could drop to 5% in the post pandemic times from 6% at the beginning of the pandemic and more than 7% in the global financial crisis.“All supply sectors feel the effect, with only human capital’s contribution unchanged from the pre virus baseline” said Ms Kishore.
This major contraction has yet not demoralized PM Modi regarding his target of making India a $5 Trillion economy by 2025 from $2.8 trillion.
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