India could lose 4% of its GDP permanently due to coronavirus-induced lockdowns

India, like many other countries, has been put under a strict lockdown to contain the spread of COVID-19. Dubbed as the world’s “strictest lockdown” owing to the nature of restrictions alongside the large swathe of population being under lockdown, India will suffer unprecedented economic losses.

According to Crisil Research, India might permanently lose four per cent of its gross domestic product value owing to the lockdown, which has now been extended upto May 17.

Even though the economy will eventually recover in many ways, this four per cent loss could be permanent, the research suggests.

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Earlier, a zero growth rate wasprojected for the Indian economy if the lockdown was extended.

Regardless of the permanent loss, the economy is not expected to recover for the next three years.

This is way more than the impact of the Global Financial Crisis of 2008, which was, until now, seen as the benchmark of economic fallout.

However, if the GDP grows at an average rate of 8.5 per cent every year upto 2023, India can recover completely. The chances of such an exceptional performance are very low, based on India’s performance.

According to Crisil Research, the fiscal measures required by the country amount up to over Rs 3.5 lakh crores, as opposed to the current Rs 1.7 lakh crores.

The GDP forecast for the country has been halved to 1.8 per cent for 2020-21, the lowest in over two decades. In March, the projected rate of growth was estimated to be 3.5 per cent.