India’s Largest Private Sector Lender HDFC Bank on Friday 24th July has given a statement that India’s GDP Growth will witness a deeper contraction of 7.5% in the current fiscal year, down from –4.8% it expected in May, as the Covid-19 cases surged in non-metro areas forcing states and local government to re-impose lockdowns in the month of July.
As far as Covid-19 Pandemic is concerned, India is facing a similar situation to that in the US, where each state would have its own epidemic curve of a rise, peak and fall in cases. India’s Economy is struggling to overcome the adverse hit from the world’s biggest lockdown. Covid-19 pandemic would prolong the economic recovery says HDFC Bank, projecting-11% growth for the second quarter and a weak 0.7% and 1.5% recovery in the third, and fourth quarters of the financial year 2021.
The ICRA (Investment Formation and Credit Rating Agency of India Limited) slashed its forecast to –9.5% from -5% earlier. CARE (Credit analysis and Rating Limited) has revised its economic recovery projections from –1.3% to –6.4%. HDFC Dispersion Index, which measures the spread in the daily new cases of corona virus reported that, there was a spike in the corona virus cases at the end of May, when the migrants travelled back to their homes and more recently in July as the mobility increased during the unlock phase.
The HDI (Human Development Index), is a statistical tool to measure a country’s overall achievement in both social and economic dimensions. It is a stable combined index of education, life expectancy, and per capita income indicators, which, ranks the countries into four segments of human development. The number of Corona virus cases has a strong inverse correlation with the Human Development Index (HDI) which in turn was inversely correlated to high outbound migration, which means that the reverse migration would bring the infection the areas of high vulnerability.
Except Madhya Pradesh, both Uttar Pradesh and Bihar, are the net exporters of migrant labour . The distribution of the corona virus cases may have a rapid escalation in these two states as there are no developed healthcare facilities. Including Uttar Pradesh and Bihar, nine states have imposed lockdowns in varying forms from the month of July. During a virtual conference on Thursday 23rd July 2020, economic affairs secretary Tarun Baja stated that such deep contractions may not actually materialize in the absence of further shocks citing an uptick in revenues since June and improvements in leading indicators.