US brokerage firm Goldman Sachs lowered India’s economic growth forecast for FY 2021-22 from 11.7 percent to 11.1 percent in view of the outbreak of the Covid epidemic and the ensuing lockdown in many states and cities. The second wave of Covid infection has taken a terrible form in India and 2.22 lakh people have died due to this disease so far, while 3.5 lakh new cases of infection are coming out every day.
Due to this, the demand for a strict lockdown has also started increasing in the whole country. However, in view of the economic loss, the Modi government has so far avoided this step. Goldman Sachs said in a report, ‘The intensity of the lockdown is less than last year. Nevertheless, the effect of strict restrictions in major cities of India is clearly visible.
Impact on services
The services have been particularly affected by the strict lockdown in the cities. Apart from this, there are also signs of an impact on the manufacturing sector due to the steady consumption of electricity and the manufacturing PMI in April. Goldman Sachs said, “Overall, most indicators are still stating that the impact has been lower this time than in the second quarter (April-June) of last year.”
The brokerage firm, however, said that the momentum is expected to return in the third quarter (July-September), as the restrictions may be somewhat lower then. Goldman Sachs estimates that in such a situation, India’s GDP growth during FY 2021-22 could be 11.1 percent, compared to 11.7 percent earlier.