Stating that the economic impact of the second wave of COVID-19 is deeper than initially expected, British brokerage firm Barclays has downwardly revised India’s GDP growth rate for 2021-22 to 9.2 per cent, from the earlier 10 per cent. Barclays revised estimate is in sync with other forecasts. In FY21, India’s economy contracted by more than 7.5 per cent.
The slow pace of vaccination drive in the country, and imposition of lockdown in several states were also a reason for the 0.8 per cent reduction in GDP growth estimate for FY22, according to Barclays’ chief India economist Rahul Bajoria.
“Although India’s second COVID-19 wave has started to recede, the related economic costs have been larger owing to the more stringent lockdowns implemented to contain the outbreak, we lower our FY 2021-22 GDP growth forecast a further 0.80 per cent, to 9.2 per cent,” Bajoria said.
At the peak of second wave, India witnessed a daily new infection count of around 4 lakh and over 4,500 deaths. Since then, the new infection count has fallen to below 2 lakh mark now, but death figures have not significantly come down.
“While we continue to believe the lockdowns will last only until end of June 2021, in our new base case, we now estimate economic losses of $74 billion, all of it contained in Q2 21 (April-June),” Barclays said in its note.
Warning about the slow pace of vaccination and a “pessimist scenario” of a third wave, the brokerage said in such an eventuality the economic costs will increase further and the GDP growth will decline to 7.7 per cent.