To prevent growth collapse, India needs intelligent lockdown exit plan: SBI study

India needs to implement an intelligent COVID-19 lockdown exit strategy to prevent an irreversible growth collapse, the SBI said in a research report on Saturday (May 30). The country’s economic growth has slipped to an 11-year low of 4.2 per cent in the year 2019-20, and then to to 3.1 per cent in January-March, which is the lowest in the last 40 quarters.

The nationwide lockdown imposed to prevent the spread of COVID-19 with effect from March 25, 2020, has severely hit economic activities. The fourth phase of the lockdown is set to end on Sunday (May 31)

According to the SBI report ‘Ecowrap’, authorities should implement an intelligent lockdown exit plan as the discussion has moved ahead from the debate between lives and livelihood. It is also about an elongated lockdown will may only prolong an irreversible growth collapse for the economy.

The recovery from recession often tends to be slow and takes almost five to 10 years to reach the earlier peak levels of economic activity. Commenting on the GDP data released on Friday, the report stated that the loss of economic activity due to the lockdown in the last week of the month of March has dragged the GDP growth to a 40-quarter low (3.1 per cent in the fourth quarter of 2019-20).

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With this, the full year of 2019-20 GDP growth has come to 4.2 per cent, which is an 11-year low, as compared to 6.1 per cent in the previous financial year. In terms of the sectors, the only silver lining was agriculture, the report said.

The agriculture and allied activities sector grew at four per cent in the fiscal ended March 2020, as compared to last year’s growth of 2.4 per cent. However, the Central Statistical Office (CSO) has revised the previous quarters’ growth rates, which is puzzling and raises questions about the data quality as well as shows a remarkable volatility in the new series. the revised previous quarters’ growth rates are as compared to the third quarter release.