Risk of recession looming in the third quarter of 2020-21: a report

New Delhi, 24 May 2020 Sunday

The Indian economy could go into recession in the third quarter of the current financial year 2020-21. This is estimated in a report.

Consumers will remain vigilant for a long time after the Corona virus outbreak, along with declining incomes and employment, according to an economic review report by Dawn & Breadstreet. This will delay the improvement in consumer demand.

"Improvement in the country's economic growth will depend on how long the stimulus package provided by the government is implemented," the report said.

Arun Singh, chief economist at Dawn & Broadstreet India, said, "The impact of stimulus measures on the Indian economy will depend on three main factors: the duration of the lockdown, the implementation capacity of the package and the time it takes."

The report, however, said that a larger-than-expected package from the government would help resume economic activities.

In addition, the Reserve Bank has reduced the repo rate by 0.40 per cent and raised the rock on loan installment payments for three months, Dawn & Breadstreet said. It will also help the economy gain momentum.

"Whatever measures the government has announced are positive," Singh said. Most of the measures are about strengthening the supply side of the economy. However, it is important to note that demand must increase along with supply.