Viral fever: Covid-19 impact on economy, corporate revenue and profitability
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Base-case GDP growth expected at 1.8% for fiscal 2021. Assumptions include effect of the pandemic subsiding materially in April-June quarter, a normal monsoon, and minimum fiscal support of Rs 3.5 lakh crore
Risks tilted towards the downside scenario of zero GDP growth
Permanent loss of ~4% of real GDP. Fiscal 2022 likely to see a V-shaped recovery at over 7% real GDP growth. However, its sustenance will not be able to lift GDP volume to its trend path even by 2024
Large swathes of informal workforce of India are vulnerable to deep slowdown, particularly in construction, manufacturing and services sector
External vulnerability likely to be low, with current account deficit (CAD) projected at 0.2% of GDP and forex reserves adequate, but domestic vulnerability rising. A risk-off scenario will, however, keep currency volatile
Agricultural sector could be the bright spot as a bumper winter crop (rabi) is being harvested. But it will need support via fiscal measures aimed at reducing labour constraints, input provision and logistics support
States accounting for 33% of population and 41% of national output are most at risk from Covid-19
Fiscal support will need to be upped at the central and state level in scale and scope to go beyond vulnerable households and cover vulnerable firms as well