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Sonal Varma, Head of Asia economics ex-Japan at Nomura, believes that the Indian economy is likely to see its first full-year contraction in more than four decades after Prime Minister Narendra Modi extended the lockdown measures from 21 days to 40 days, in an effort to contain the coronavirus outbreak.

Key quotes:

“The lengthening of the mandatory stay-at-home period to 40 days from 21 days will result in a direct output loss of more than 8% over that time.

There will be indirect effects such as the persistence of the public fear factor even after the lockdown ends.

Besides, there will be an impact on livelihoods of the unorganized workforce, and a sharp increase in corporate and banking sector stress, which are likely to further weigh on growth.”

Meanwhile, Bloomberg economists noted: “A precipitous recession in India is inevitable.”

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