Coronavirus lockdown set to cost India $120 bn, forecast brokerages

Brokerages have cut India’s growth forecast sharply and estimated the 21-day lockdown to cost $120 bn, roughly 4% of GDP.

Barclays trimmed India’s FY21 GDP forecast to 3.5% from 5.2% earlier, while CRISIL said the downside risks have become more pronounced for the economy after the lockdown announcement. Industries and SMEs will face the brunt as they will run on zero revenues for three weeks and daily wage earners will be hit the most.

Experts suggest a rate cut along with loan forbearance and a special liquidity window for banks and NBFCs. The RBI should also engage in bond purchases through OMOs and a stimulus package, they say.