Fitch ratings, CRISIL, and SBI Research have drastically cut India’s economic growth forecast in the current fiscal year due to a prolonged lockdown. While both Fitch and CRISIL projected the economy to contract 5 per cent, from their earlier estimates of the economic growth at 0.8 per cent and 1.8 per cent, respectively, SBI Research slashed economic contraction to 6.8 per cent from earlier 4.7 per cent.

In its latest report, CRISIL said it would really be a long road to recovery and going back to the pre-Covid-19 trend level of gross domestic product (GDP) in India will not be possible for the next three fiscal years. The lockdown extension, higher economic costs, and an economic package that lacked muscle are the three key reasons why CRISIL has downgraded the GDP forecast.

“The economic costs, now beginning to show up in the hard numbers, are far worse than our initial expectations. Given one of the most stringent lockdowns in the world, April could well be the worst-performing month for India this fiscal year,” it said.

Though the agency expects non-agricultural GDP to contract 6 per cent, agriculture could cushion the blow by growing at 2.5 per cent in FY21, CRISIL said.

SBI also calculated GDP growth taking bottom-to-top approach than earlier top-to-bottom one. As such, group chief economic advisor Soumya Kanti Ghosh estimated the district-wise, zone-wise loss in GSDP for each state and found that total GSDP loss due to Covid-19 for states stands at Rs 30.3 trillion, which is 13.5 per cent of total GSDP.

Fitch said India had had a very stringent lockdown policy that had lasted a lot longer than expected and incoming economic activity data had been spectacularly weak.