The unprecedented nationwide lockdown that shut businesses, suspended flights and stopped all modes of transport will cost the Indian economy almost USD 4.64 billion every day and the entire 21-day lockdown will result in a GDP loss of almost USD 98 billion, Acuite Ratings & Research Ltd said on Thursday.
The rapid spread of Covid-19 has not only disrupted the global economy but also triggered a partial shutdown in many parts of India from early March and an almost complete shutdown from March 25.
"While the countrywide shutdown is scheduled to be lifted from April 15, 2020, the risks of prolonged disruption in economic activities exist depending on the intensity of the outbreak," the credit rating agency said in a statement.
The ongoing disruption, it said, will have a significant economic consequence across the world and also in India.
IMF has already forecast a recession for the global economy in 2020.
Acuite Ratings believes there is a risk of a contraction of April-June (2020-21 fiscal) GDP to the extent of 5-6 per cent, with Q2 (July-September) also likely to post modest growth in a best-case scenario.
It expects the overall GDP growth for FY21 (April 2020 to March 2021) to be in the band of 2-3 per cent which takes into account a significant economic revival in the second half of the financial year.
Sankar Chakraborti, CEO, Acuite Ratings & Research, said: "Acuite Ratings estimates that every single day of the nation-wide lockdown will cost the Indian economy almost USD 4.64 billion. Consequently, the 21-day lockdown will result in a loss of GDP of almost USD 98 billion."
Karan Mehrishi, Lead Economist, Acuite Ratings & Research said: "The agricultural sector which accounts for 15 per cent of GVA, is nonetheless, expected to see continuing activity even in the lockdown period; however, the allied activities are partly impacted as livestock and fisheries are experiencing mute demand due to the Covid-19 concerns."
The credit rating agency said it would take at least 2-3 months to restore the industry supply chain even if the lockdown is limited to 21 days. "There are also further risks of local lockdown in various regions of the country depending on the extent of the outbreak and partial disruption in economic activities till H1FY19 is a realistic scenario."