Icra Ratings on Tuesday sharply cut the country's GDP forecast amid the COVID-19 crisis and expects the economy to grow at just 2 per cent in the current fiscal.
It said the nationwide lockdown announced to contain the coronavirus outbreak has impacted industries and their operations have come to a standstill.
"The Indian economy is likely to witness a sharp contraction of 4.5 per cent (de-growth) during Q4 FY20 and is expected to recover gradually, to post a GDP growth of just 2 per cent in FY21," the rating agency said.
It said the concerns on account of Covid-19 have morphed from the impact of imports from China on domestic supply chains, into a domestic and external demand shock, with social distancing and lockdowns leading to production shutdowns and job losses in some sectors.
The rating agency's vice president and sector head (corporate ratings) Shamsher Dewan said, "Amid uncertainty as to when the situation will normalize, we expect a sharp downturn in various indicators of the manufacturing and services sectors from March 2020 onwards."