Coronavirus impact: India set for 'W-shaped' economic recovery with potential $1t loss
Dubai - The report states that as India starts to open for business, the worst of Covid-19's impact will be felt by the country's most vulnerable.
India is headed towards a W-shaped economic recovery with a potential economic contraction of 10.8 per cent while facing a potential loss of $1.0 trillion in fiscal 2021, global management consultancy Arthur D. Little said on Wednesday.
"The government recovery programme needs to provide a comprehensive safety net for vulnerable sections and support micro, small and medium enterprises. Clear policy announcements, comprehensive safety nets and decentralized systems of governance will be essential to not only flatten the curve, but also reverse the economic trajectory," ADL said in a report that aims to provide a realistic picture of the economic impact Covid-19 has had on India.
The report was released in the wake of the massive ?20 trillion stimulus package unveiled by the Indian government to revitalise the economy hit hard by the pandemic lockdown.
Barnik Chitran Maitra, lead author of the report and managing partner of ADL India and South Asia, said the third largest Asian economy would have a W-shaped economic recovery with a potential economic contraction of 10.8 per cent with the potential loss of $1 trillion in fiscal 2021.
"The report seeks to inform policy makers about the range of measures they can take to avert this disaster, while also protecting the neediest people."
The report states that as India starts to open for business, the worst of Covid-19's impact will be felt by the country's most vulnerable in terms of job loss, poverty increases and reduced per capita income, all of which will be reflected in a steep decline in GDP. Up to 135 million jobs could be lost and around 120 million people could be pushed into poverty, all of which will reduce consumer income, spending and savings.
"For India to reach its $5 trillion vision, a radical economic approach is needed, centered on immediate stimulus and structural reforms. It is encouraging to see the prime minister's visionary, Atmanirbhar Bharat Abhiyan, already putting plans in place for this new approach," said the report.
"India has a unique window of opportunity to take advantage of a geostrategic realignment of the world order and strengthen its global investment corridors, particularly with the Middle East," said Thomas Kuruvilla, global board member and managing partner of ADL Middle East.