The Indian economy is likely to contract by over 10% in FY21 on account of COVID-19 impact, Arthur D Little says in a report.
“India is headed towards a W-shaped economic recovery with a potential GDP contraction of 10.8% in FY21,” said Barnik Chitran Maitra, lead author of the report and Managing Partner & CEO of Arthur D Little, India and South Asia.
“An opportunity loss of $1 trillion is staring India in its face. For its $5 trillion vision, a radical economic approach is needed, centred on an immediate stimulus and structural reforms,” he said.
According to the report, the worst of COVID-19’s impact will be felt by India’s most vulnerable in terms of job loss, poverty increase 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 120 million people could be pushed back into poverty, all of which will reduce consumer income, spending and savings,” he said.
“The Prime Minister’s visionary Atma Nirbhar Bharat Abhiyan is a good start to this new approach,” he added.
Ashwini Deshpande, Professor of Economics at Ashoka and Director of Centre for Economic Data and Analysis (CEDA), and one of the co-authors of a counterpoint included in the report said, “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” he added.
While COVID-19 presents a grave threat to India’s economic potential, it is equally an opportunity for India to revisit all the obstacles that lie in its path to greater prosperity, the report said.
It has proposed a 10-point programme requiring a $280 billion of spending and investment measures which should be supported by policy reforms, and proportionate monetary and liquidity measures to secure a sustainable economic future for 1.3 billion Indians.
