India will experience its worst recession ever, according to economists at Goldman Sachs, after a poor data run underscored the damaging economic impact of lockdowns in the world's second-most-populated nation. Goldman Sachs also noted that efforts by the Indian government to improve the economy concentrate more on the medium-term effect than immediate help.
Their report also predicts that India's Gross Domestic Product ( GDP) will contract by an annualized 45% in the second quarter from the previous three months or a quarter of June. The government announced a 20-lakh crore relief package to aid people due to the effects of the coronavirus, but the economists of Goldman Sachs expect that this would not have much effect in the short term.
Goldman economists Prachi Mishra and Andrew Tilton wrote in a note dated May 17 that those forecasts suggest that real GDP would fall by 5 per cent in the 2021 fiscal year, which would be deeper than any other recession India has ever experienced.
Speaking of the reforms, the economists said in their note, "These reforms are more of a medium-term nature, so we don't expect them to have an immediate effect on boosting growth. We will continue to track their implementation in order to assess their impact on the medium-term perspective.
India's government has extended its nationwide lockdown until May 31, while further loosening restrictions to improve economic activity in some sectors as coronavirus cases escalate across the region. The announcement followed the fifth briefing of FM Nirmala Sitharaman in as many days, in which she presented specifics of the country's $265 billion virus rescue plan, equivalent to 10 per cent of India's GDP.
According to data from Johns Hopkins University, infections are on the rise across India where the total population is 1.3 billion people, with more than 91,300 infections and 2,897 deaths as of Sunday.