As India contemplates an exit strategy from the 40-day long nationwide lockdown ending 3 May, Swiss bank UBS on Wednesday projected the country’s economy to contract 3.1% if mobility restrictions stay in place until end-June and economic activity returns to normal by end-August. However, for the base case scenario, assuming current mobility restrictions are lifted by mid-May, and economic activity is largely back to normal by end-June, the Indian economy could contract 0.4% in FY21 from its earlier estimate of 2.5% growth. “The challenges for India versus its peers are starker if infections spread rapidly considering India’s higher population density per capita, weaker health infrastructure and limited resources for intensive testing,” UBS said in its report on “India Economic Perspectives”. UBS said under its two alternative scenarios, it assumes the economic weaknesses in the short term could intensify and the significant secondary impacts of job losses, reduced income levels, corporate defaults, rising bad loans could delay a potential recovery.

(Live Mint)