That sinking feeling

• CRISIL sees the Indian economy shrinking 5% in fiscal 2021 (on-year), because of the Covid-19 pandemic
  
• The first quarter will suffer a staggering 25% contraction
  
• About 10% of gross domestic product (GDP) in real terms could be permanently lost
  

A month is a long time in today’s pandemic-stricken world.

CRISIL forecasts India’s GDP growth to fall off a cliff and contract 5% in fiscal 2021. Earlier, on April 28, we had slashed our prediction to 1.8% growth from 3.5% growth. Things have only gone downhill since.

While we expect non-agricultural GDP to contract 6%, agriculture could cushion the blow by growing at 2.5%

In the past 69 years, India has seen a recession only thrice – as per available data – in fiscals 1958, 1966 and 1980. The reason was the same each time – a monsoon shock that hit agriculture, then a sizeable part of the economy.

The recession staring at us today is different. For one, agriculture could soften the blow this time by growing near its trend rate, assuming a normal monsoon. Two, the pandemic-induced lockdowns have affected most non-agriculture sectors. And three, the global disruption has upended whatever opportunities India had on the exports front.