Hours earlier, Prime Minister Narendra Modi extended the three-week lockdown ending Tuesday till May 3, citing the need to arrest the growth in coronavirus infections. He did hint at relaxations in unaffected areas starting from April 20, but added that this will be based on strict monitoring.
The brokerage had said earlier that the three-week lockdown would likely to have an economic cost of USD 120 billion which is now estimated to balloon up to USD 234.4 billion.
It was earlier expecting India to clock a 2.5 per cent growth in calendar 2020, which has now been projected to be zero, while the FY21 growth has been revised down to 0.8 per cent from the 3.5 per cent earlier.
“As India heads into a longer complete shutdown until May 3 to combat the rising number of COVID-19 cases, the economic impact looks set to be worse than we had expected earlier,” the brokerage said.
Noting that while India is still not officially calling the infections to be in the community transmission stage, the existing restrictions on movement are causing much more economic damage than anticipated.
In particular, the negative impact on the “essential sectors” of mining, agriculture, manufacturing and utility sectors appears higher than expected, it said.
The brokerage said while arriving at the numbers, it has assumed that the lockdowns end by early June, followed by a modest rebound in activity, reflecting inventory rebuilding across certain sectors.
If the COVID-19 outbreaks in a localized area continue leading to frequent shutdowns, the scope for the economy to recover will continue to decline, it warned.