India reports 90,000 new daily COVID-19 cases... Lockdown lifted to save economy but recovery hindered
Unemployment criticism hashtags trending on SNS
[Asia Economy Reporter Jeong Hyunjin] India, a 'hotspot' where new COVID-19 cases are increasing by 90,000 daily, is increasingly expected to experience a worse economic downturn than anticipated. Major economic institutions have downgraded their economic forecasts, citing the failure of containment measures leading to greater economic damage.
According to Bloomberg on the 18th, Goldman Sachs projected that India's economic growth rate for the 2020 fiscal year (April 2020 to March 2021) will be -14.8%. Goldman Sachs revised its forecast after reporting that India's GDP contracted by 23.9% in the April-June quarter, the largest decline since records began in 1996.
Major international organizations also expect India's economy to deteriorate significantly this year. The Asian Development Bank (ADB) forecasted -9%, and the Organisation for Economic Co-operation and Development (OECD) projected -10.2%. Credit rating agency Fitch initially expected -5.8% but has now downgraded it to -11.8%. Deutsche Bank also lowered its forecast from -6.2% to -8.0%.
The reason for these successive downgrades in India's economic outlook is the worsening spread of COVID-19. India has recently reported over 90,000 new cases daily, making it the fastest-growing COVID-19 hotspot worldwide. According to Worldometer, the cumulative number of confirmed cases is approximately 5.21 million, the second highest after the United States. The failure to contain COVID-19 has increased concerns that economic recovery will be more difficult.
Sunil Kumar Sinha, Chief Economist for India at Fitch, stated, "While a global resurgence of COVID-19 is confirmed, India has still not controlled the first wave." Kaushik Das, Chief Economist at Deutsche Bank, said, "India is expected to experience a slow recovery in corporate profitability over the coming quarters," adding that this will reduce the capacity for new investments that could drive economic growth.
As economic forecasts worsen, the difficulties faced by Indians unable to find jobs are also increasing. On the previous day, 2.75 million posts with the hashtag 'National unemployment day' appeared on the social networking service Twitter in India. This expressed dissatisfaction amid the loss of 19 million jobs in India between April and July.
Despite the ongoing spread of COVID-19, the Narendra Modi government lifted lockdown measures in May to revive the economy and announced a large-scale stimulus package worth 21 trillion rupees. However, COVID-19 cases have rapidly increased since then, further worsening the economic situation.
Nevertheless, Bloomberg reported that Prime Minister Modi's approval rating remains high. According to a poll conducted last month by Indian media outlet India Today, 78% of respondents rated the current government's policies as 'excellent' or 'good,' while only 5% responded 'poor.'
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