India’s economic outlook has weakened again, albeit slightly, with worst-case scenario forecasts suggesting the toll from the coronavirus pandemic could be much deeper, stoking fears the job crisis may worsen over the coming year, a Reuters poll found.
Renewed restrictions to curb the current coronavirus wave have stalled economic activity, leaving many millions out of work and pushing economists – who have broadly been bullish – to downgrade their views for the second time since early April. read more
The May 20-27 poll showed the outlook for the current quarter was lowered to 21.6 per cent annually, and to 9.8 per cent on average for this fiscal year, down from 23.0 per cent and 10.4 per cent respectively a month ago. The economy was then forecast to grow 6.7 per cent next fiscal year, compared to 6.5 per cent predicted previously.
Underscoring concerns that a slow vaccine rollout may make a bigger dent in the economy, the consensus showed in a worst-case scenario the economy would average just 6.8 per cent growth this fiscal year after its deepest ever recession last year.
India’s unemployment rate soared to a near one-year-high of 14.73 per cent in the week ending May 23, according to the Center for Monitoring Indian Economy (CMIE), reflecting the impact of the economic slowdown.
When asked if there was a risk that India’s unemployment situation could worsen over the coming year, more than 85 per cent, or 25 of 29 respondents, said it was high, including four who said very high. The remaining four said the risk was low.
The Reserve Bank of India has kept its monetary policy loose, including several liquidity measures, and was expected to stay on an easy course for this fiscal year.
While calls have increased for more fiscal stimulus to speed up the economic healing, the government has limited space to respond to challenges posed by the health crisis.❐
