Indian Economy after COVID 19 outbreak


  • With fresh corona virus cases(www.worldhealthorganisation.com)on the rise in India and globally, economic activities are shut with the nation wide lockdown (https://www.indiatoday.in/diu) to the extent of 85%.
  • Morgan Stanly has cut India's INC'S earning for the 3rd time since the virus outbreak
      • PRIMA FACIE EFFECTS ON INDIAN ECONOMY
      1. Job losses
      2. Stretched balance sheet
      3. Lower Capex
      4. Weak consumer demand
  • First two rounds of lock down already wiped Rs. 52 lacs crore resulting in a multi year low benchmark of SENSEX and NIFTY falling 35% from the Janauary Highs.
  • According to Barclays, the cumulative shut down costs at around $120 billion.
  •  Now the new GDP forecast  is 2.5 instead of 4.5 as stated earlier for F/Y 19-20 and 3.5 instead of 5.2 for F/Y 20-21.
      • FOUR SCENARIOS OF EFFECTS 
  • Scenario-1        Situation worsen in india as well as globally, there will futher selling of domestic stocks. In this case, the GDP may drop below 3.5.
  • Scenario-2       Rosy situation , there would be gradual buyers in equities. In this case, the GDP would be between 4.5 to 5
  • Scenario-3       The virus would be contained in India but crisis would worsen globally, in this case the indain equties will outperform but due low buying capacity of global market, there would be global recession but GDP may be around 4.5 at the end of F/Y 20-21.
  • Scenario-4       The virus would be contained in India and globally, in this case, indian market will outperform and will be an aggressive buyers of raw material to do mass production. In this case, there will be manageable global slow down which may last maximum for 12 months.
As per the recents trends Indian economy is going to fall under Scenario-4 and therefore government must come up with visiable and strategic plans for next 12 months.

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