Despite the Reserve Bank of India's (RBI) massive actions to spur the economy, India's gross domestic product (GDP) is likely to contract by 4.5 per cent in the April-June 2020 quarter and will rise by only 2 per cent in 2020-21 on the coronavirus impact, according to domestic rating agency Icra.
While announcing a number of measures in the policy review, the RBI refrained from giving its estimate on both growth and inflation, saying things are fluid and rapidly changing.
The Indian economy was already supposed to clock a decadal low growth of 5 per cent in 2019-20, according to official estimates, and the coronavirus-related worries have only compounded the problems.
"Regardless of the measures announced now by the RBI, we are lowering our base case scenario for GDP growth to (-)4.5 per cent for Q1 FY2021 and to 2 per cent for FY21," Icra said in a note on Friday.
They said the estimate is guided by the rapidly growing uncertainties over the duration of the impact of coronavirus on economic activity in India and the rest of the world.
The RBI's policy measures got welcomed as a set of "comprehensive announcements" by the agency.
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"The combination of moratoriums, liquidity enhancing measures and the sharper-than-hoped-for repo rate cut will help to assuage the markets in these increasingly unsettled times, and offer some protection against widespread defaults, even though the actual impact on boosting economic activity may be limited," it said.
A slew of analysts have been downwardly revising their growth estimates following the outbreak of the coronavirus pandemic in India and also a host of developed countries.
India has been placed under a three-week lockdown till mid-April, which has chilled virtually all the economic activity.