New Delhi: Wall Street brokerage Goldman Sachs has lowered its estimate for India’s economic growth to 11.1 per cent in fiscal year to March 31, 2022, as a number of cities and states announced lockdowns of varying intensities to check spread of coronavirus infections.
India is suffering the world’s worst outbreak of COVID-19 cases, with deaths crossing 2.22 lakh and new cases above 3.5 lakh daily. This has led to demand for imposition of nationwide strict lockdowns to stem the spread of the virus – a move that the Modi government has so far avoided after the economic devastation last year from a similar strategy.
Instead, it has left it to the states to impose restrictions to manage the virus. Several states and cities have imposed lockdowns of varying degrees.
“The intensity of the lockdown remains lower than last year,” Goldman Sachs said in a report. “Still, the impact of tighter containment policy is clearly visible in higher frequency mobility data across key India cities.”
As containment policy has tightened, high frequency data — particularly on the services side — has taken a hit. The manufacturing side — as indicated by high frequency data on electricity consumption, and the stable April manufacturing PMI — has been more resilient.
Labour market indicators suggest that the daily unemployment rate has ticked up moderately in recent weeks, but the employment impact so far is much more contained than in April-June last year.
“Overall, most indicators still suggest that the impact has been less severe than it was in Q2 (April-June) last year,” Goldman Sachs said.
While the lockdown impact is much less severe than last year, the recent declines in services indicators including e-way bills, mobility, rail freight and cargo traffic has led to trimming GDP estimates.
“While activity is likely to rebound back quite sharply from Q3 (July-September) onwards — assuming restrictions can ease somewhat over that timeframe — the net result is to lower our FY22 real GDP growth forecast to 11.1 per cent (from 11.7 per cent previously), and our 2021 calendar year growth forecast to 9.7 per cent (from 10.5 per cent),” it said.