From Business Standard: SBI house economists have pegged the growth forecast for January-March at 2.5 per cent and for 2020-21 at 2.6 per cent given the massive disruptions to businesses and the economy due to the COVID-19-driven lockdowns, which has upended at least 70 per cent of the economy.[...]The 21-day lockdown will cost the economy at least Rs 8 trillion, according to a report by SBI Research, which says at least 70 per cent of the economy is on a standstill because of this.We estimate another 1.7 per cent impact on real GDP because of the 21-day lockdown in FY21 resulting in at least 70 per cent of the economy at a standstill. We peg FY21 GDP estimate at 2.6 per cent, with a clear downward bias, with Q1 of FY21 GDP numbers witnessing a contraction. FY20 GDP estimates could also see a downward revision from 5 per cent to 4.5 per cent with Q4 growth at 2.5 percent, SBI Research said in a note, adding pegged the total cost of the 21-lockdown at Rs 8.2 lakh crore in nominal terms and output loss at 4 per cent on a conservative approach. But they are quick to add that the economy could rebound if a stronger stimulus is offered.Given the low market appetite for borrowing, it is imperative that government uses the clause given in FRBM Act and monetize the deficit with the RBI subscribing to the primary issues of the Central government debt and fulfill the supply-demand gap in FY21, the report said. In FY2020, total borrowing by the Centre and states stood at Rs 13.5 lakh crorethe Centre at Rs 7.1 lakh crore and the states combined Rs 6.4 lakh crore.Given at least estimated 4 per cent slippage in GDP/Rs 8 lakh crore, we expect the Centre and the states could borrow conservatively close to Rs 20 lakh crore in FY21. Thus, it is a must that RBI monetizes the deficit, using the national calamity clause given the stressed market absorption capacity, it says, adding this will add up to 2.5-3 percent of GDP and the government must show it separately as an off-balance sheet item in the budget like a 'COVID bond'.
From Mint: “In India, Nigeria and Brazil, the number of workers in the informal economy affected by the lockdown and other containment measures is substantial. In India, with a share of almost 90% of people working in the informal economy, about 400 million workers are at risk of falling deeper into poverty during the crisis. “Current lockdown measures in India, which are at the high end of the University of Oxford’s COVID-19 Government Response Stringency Index, have impacted these workers significantly, forcing many of them to return to rural areas," it added.The ILO warning corroborates data from Indian think tanks, which shows how unemployment has tripled in urban India and rural hinterlands within a span of past three weeks. The Centre for Monitoring of Indian Economy has said unemployment rate in India was 23.4% in the week ended 5 April. CMIE data showed that while urban unemployment rate was 30.9%, rural unemployment rate was over 20% and economists have warned that things may only worsen in rural India due to reverse migration in last two weeks.
According to the new study, 1.25 billion workers are employed in the sectors identified as being at high risk of “drastic and devastating” increases in layoffs and reductions in wages and working hours. Many are in low-paid, low-skilled jobs, where a sudden loss of income is devastating. Worldwide, two billion people work in the informal sector (mostly in emerging and developing economies) and are particularly at risk. The estimates are based on ILO "nowcasting" model (uses real-time economic and labor market data to predict the loss in working hours in Q2 2020).
Large-scale, integrated, policy measures are needed, focusing on four pillars: supporting enterprises, employment and incomes; stimulating the economy and jobs; protecting workers in the workplace; and, using social dialogue between government, workers and employers to find solutions, the study says.
The most highly affected activities include accommodation and food services; real estate, business and administrative activities; manufacturing; and wholesale and retail trade. Medium to highly affected activities include arts, entertainment and recreation and other services; and transport, storage and communication. Medium affected activities include mining and quarrying; financial and insurance activities; and construction. Low affected activities include agriculture, forestry and fishing; utilities; public administration and defence; human health and social work activities; and education.
The highly affected activities are labor intensive, and employ millions of low-paid and low-skilled workers.
