Worst recession hits India in the current fiscal year: CRISIL
As per CRISIL, in real terms there will be a permanent loss of about 10% Gross Domestic Products (GDP) which means that going back to the growth rates seen before the pandemic is highly unlikely in the next three fiscals.
Credit Rating Information Services of India Limited (CRISIL) on May 26 stated that India’s worst recession till date is here as it has been predicted that the economy will shrink by 5 percent in the current fiscal year.
In its assessment of India’s GDP, CRISIL mentioned that the First Quarter (April to June 2020) will be suffering a staggering contraction of 25 percent. It will be the fourth recession since Independence and first since the Liberalisation.
As per the available data, in the past 69 years, India has seen recession only thrice- in fiscals 1958, 1966 and 1980. The reason for the recession in all three of them was the same- a monsoon shock hitting agriculture and then a sizeable part of the economy.
• As per CRISIL, in real terms there will be a permanent loss of about 10% Gross Domestic Products (GDP) which means that going back to the growth rates seen before the pandemic is highly unlikely in the next three fiscals.
• CRISIL also mentioned that the nationwide lockdown that was imposed by the central government to control the spread of Coronavirus on March 25 and then extended thrice till May 31 has impacted and curtailed the economic activity severely.
• It has also been observed that the economic activity in states suffering from high coronavirus cases will see prolonged disruptions as restrictions will continue longer to combat the virus.
Observation on the worst recession:
CRISIL while talking about the economic scenario of India mentioned that the recession in the current fiscal year (April 2020 to March 2021) will be different as the agricultural sector will be able to soften the blow this time by growing near its trend rate. The role of agriculture has been discussed on an assumption of a normal monsoon season.
CRISIL further mentioned that the first quarter of this fiscal year will be the worst affected. The first quarter will be a washout not only for the non-agricultural economy but also for services such as travel and tourism and education among others will also face a big hit in the quarters. There will also be an extended loss of jobs and incomes as these sectors are the largest employers.