Belated Lockdown May Do Little to Save India’s Economy

As the coronavirus outbreak rattles the world, India has become a spotlight of global attention. The country has a population of 1.3 billion, and the large population density, poor sanitary conditions and limited testing capacity will make things even worse once the virus spreads out.

PM Modi extend the national lockdown, slums may become “time bomb”

Confirmed cases in India have increased rapidly since the end of March. On March 24th, Prime Minister Narendra Modi announced emergency lockdown measures which may be a bit too late, given that global cases had totaled 300,000.

Since late April, the number of newly confirmed cases per day in India has soared by 14%. The financial city Mumbai has become a national epicenter, while confirmed cases in the largest slum Dharavi hosting 700,000 Indians have exceeded 100 and may continue to grow.

India’s confirmed cases of coronavirus is increasing rapidly

Over 100 million Indians could be infected, the economy faces great uncertainties

Some experts believe that with the continuous increase in the number of diagnoses in India, the number of people infected may reach 130 million in the future, which will further weigh on domestic economy. The World Bank predicts that India’s economic growth will decline by at least 1.5% this fiscal year, a record low in nearly 30 years. In addition, the Indian Economic Monitoring Center’s recent data suggests that India's unemployment rate has soared from 8.7% in March to 23.6%.

India’s unemployment rate surged amid the outbreak

Will India survive the challenge？

From a macro perspective, economy is deteriorating in parts of the country, as March’s export shrinkage suggests a even worse situation than during the global financial crisis. Currently India has relaxed nationwide lockdown, allowing businesses in limited industries to resume operation. But local governments prefer more caution, given the public health risks of hastily reopening businesses.Market participants observed that the government need to step up market-rescuing measures to revive economy.

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