Right now the entire world is suffering from a coronavirus outbreak. Due to this Prime Minister Narendra Modi called for a 21-day lockdown. The whole country is praising and supporting Mr. PM’s decision. 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. India going to lose about $120 billion (Rs 9.12 lakh crore) due to the lockdown. According to some reports, GDP is going to reduce by 2% this year. This year already India’s economy shown some decline and coronavirus is going to make the condition worst.
Estimated growth this year from 4.5% to 2.5%
According to the reports, they prepare data to assume four weeks of the complete shutdown and eight weeks of partial closure. The growth going to reduce from 4.5% to 2.5% in 2020 and from 5.2% to 3.5% for the entire financial year (2020-21). But, they expect the growth to increase next year.
RBI may cut interest rates by 1.65% by August
The bank had earlier estimated that the RBI going to cut interest rates by 65 basis points in view of the slowdown, but now said that the rate cut would be even higher. The 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.
Government’s fiscal deficit likely to remain at 5%
The report said that the government’s financial target would be difficult to achieve due to the reduction in GDP growth. In such a situation, they can demand money from RBI. However, it is too early to say anything on this issue.
Lockdown will cost economic problems it will India to tackle coronavirus. Otherwise, lakhs of people will die. India is a developing nation, they do not develop it like China and Italy.