Oxford Economics report finds that India would be the worst-affected among the world’s major economies even after the waves of Covid-19 disappears.
The balance sheet states that had been building before the coronavirus outbreak will probably worsen, Priyanka Kishore, head of economics for South Asia and South-East Asia, wrote in the report. She projects potential growth for India at 4.5% over the next five years, lower than 6.5% before the virus.
“It’s likely that headwinds already hampering growth prior to 2020 — such as stressed corporate balance sheets, elevated non-performing assets of banks, the fallout in non-bank financial companies, and labor market weakness – will worsen,” she said. “The resulting long-term scars, probably among the worst globally, would push India’s trend growth substantially lower from pre-Covid levels.”
The International Monetary Fund predicts GDP will shrink 10.3% in the year to March 2021 as Modi’s sudden lockdown paralyzed activity. While a sharp rebound is a forecast as economic activity resumes, there are lingering scars.