Delays in the corona vaccine could be fatal to the economy, down to 7.5 percent of GDP

Mumbai, 13 July 2020 Monday

The Indian economy could be hit hard by the corona vaccine, a brokerage firm said on Monday. .

He says declining economic activity could reduce the base case by up to 4 percent of GDP, with ongoing efforts globally to develop a corona virus vaccine, but so far no timeline has been announced as to when the corona vaccine will finally be ready.

Many experts estimate that the Indian economy will shrink by about 5 per cent in FY2021, the biggest reason being the lockdown, with some analysts estimating it at 7.2 per cent.

According to the Bank of America, if the global economy had to wait a year for Covid-19, it would reduce Indian GDP by up to 7.5 per cent.

These experts have called it a beer case, noting that a possible reduction in the base case has been predicted, but the meaning of the beer case is in a way disappointing.

Experts who had projected a 5 per cent decline even in the worst scenario, now say a one-month lockdown is hurting 1 per cent in terms of annual economic growth.

He said in his response, the Reserve Bank of India may cut policy rates by another 2 per cent during FY2021.

Proprietary indicators on economic activity, i.e. buyers and sellers' different views, indicate that it declined by 20.6 per cent in May and 29.7 per cent in April.

Industrial production fell 34.7 per cent in May and 57.6 per cent in April, he said, adding that GDP in the first quarter could fall by 18 per cent.

These economists have predicted that all economic activity will resume as usual by the end of October, with some states re-imposing lockdowns to anticipate further declines in GDP, which could see a decline of 1 to 4 per cent.