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Lockdown Can Cost Around Rs. 9 Lakh Crore, Say Experts

It has specified the cost of the nation-wide lockdown at USD 90 Billion, which is way higher than the lockdowns announced by other states such as Maharashtra. 

Mumbai| Amounting the cost of locking down the entire country amid the coronavirus-crisis at USD 120 billion (approximately Rs 9 lakh crore) or around 4% of the GDP, analysts on Wednesday shrewdly cut down their pre-estimated growth rate and iterated the necessity of announcing an economic package amid the crisis.

The Reserve Bank of India (RBI) is scheduled to announce its maidan bi-monthly policy review on 3rd April. It is speculated to deliver deep rate cuts. An assumption is that the fiscal deficit targets will be breached,  suggested analysts.

PM Modi announced a three-week lockdown in the country to contain the spread of deadly Covid-19. The equity markets on Wednesday were insolvent early in the trade, down by 0.47 percent.

“We estimate that the cumulative shutdown cost around USD120 billion or 4 percent of the gross domestic product (GDP),” British brokerage Barclays suggested in a note, reported India Today. It also revised its growth forecast for Financial Year 21, cutting it down by 1.7 percent.

It has specified the cost of the nation-wide lockdown at USD 90 Billion, which is way higher than the lockdowns announced by other states such as Maharashtra.

Domestic brokerage Emkay applauded the government for acting earlier than other countries but also showed dismay over no mention of mitigating the adverse economic effects of the lockdown.

“The Indian government has so far been largely silent on the economic impact from the lockdown, leave alone any measures to cushion the hit,” they said.

The unorganized sector, which is already suffering an impact of demonetization and GST, will be pushed towards brink due to these measures, Emkay further warned.

Finance Minister Nirmala Sitharaman, while addressing some measures to aid the economy on Tuesday, said an economic package was in making and will be announced soon.

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