Wed, 23 Jun 2021

Mumbai (Maharashtra) [India], May 11 (ANI): India's gross domestic product (GDP) growth can drop to 8.2 per cent in the current financial year (2021-22) if second wave of coronavirus pandemic peaks by June-end, according to rating agency Crisil.

However, it maintained its baseline estimate of 11 per cent growth. But the risk is firmly tilted downwards to the projection of 11 per cent growth in FY22, said Crisil while giving two scenarios.

In a moderate scenario under which the second wave peaks by May-end, GDP growth will drop to 9.8 per cent but will slip to 8.2 per cent in a severe scenario. In both the cases, the permanent loss to GDP over medium-term will rise to 12 per cent from 11 per cent in the base case.

"The intensity of the second wave of Covid-19 infections has come as a surprise and is haemorrhaging the country's healthcare infrastructure. That has made lockdowns and restrictions inevitable," said Crisil.

Dispersion of cases across states now mirrors the September 2020 peak. "Worryingly, the number of cases has exceeded the peak by over 3x, highlighting the increased burden on healthcare services," it said adding that caseloads are spreading to rural areas where healthcare infrastructure is weak.

However, lockdowns have been less restrictive for economic activity and are concentrated in the most-hit states. Agriculture, construction, manufacturing and other essential activities are permitted to continue.

Still, the impact of second wave on India's economic recovery can further hit capital inflows, said Crisil.

"The second wave can have moderate to severe impact on growth depending on how long it lasts. Pandemic will leave scars that will take time to erase."(ANI)

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