“The tide is turning, which suggests that it is not unwise to dream of better days even in the darkest times,” Shaktikanta Das said in a video conference Friday. In his poetic impetus, the Governor of the Reserve Bank of India (RBI) sought to be optimistic. But the figures revealed are worrying.
For the 2020-2021 fiscal year, the RBI’s growth forecast is for a GDP contraction of 9.5%. The projections of the Indian central bank thus join those of the World Bank (-9.6%) and rating agencies, such as Fitch (-10.5%). Goldman Sachs even predicts a plunge of … 14.8%.
The worst is over
According to the Indian Central Bank, the worst of the first quarter contraction, in which the economy plunged 23.9% , has nevertheless passed. “Less than a second wave, India is on the verge of shedding the deadly grip of the virus and renewing with its pre-Covid growth trajectory , ” said the RBI governor. The coronavirus has already infected nearly 7 million people in India since the start of the pandemic and has claimed the lives of more than 100,000 of them. If the virus continues to rage, some experts believe its progression may be slowing down.
Over 20 million jobs lost
But this pandemic has already been devastating for the most vulnerable. About 400 million workers in the informal sector are at risk of sinking further into poverty, warned the International Labor Organization (ILO) in April. Around the world, up to 115 million people could fall into extreme poverty this year, according to the World Bank. The fragile Indian middle class, once the engine of the South Asian giant’s growth, is also under threat. Between April and August, 21 million salaried jobs were lost in India, according to the Center for Monitoring the Indian Economy.
Large room for maneuver for Modi
Despite this poor economic performance, Indian Prime Minister Narendra Modi has so far been politically spared. “He continues to enjoy the confidence of large segments of the electorate ,” says Asim Ali, a researcher at the New Delhi Policy Research Center. Modi convinced the people that he was taking drastic and politically difficult measures for their safety, which played in favor of his image as a strong man and favored the indulgence of the population, ” continues the analyst, who judges that the Prime Minister still enjoys a wide margin of maneuver.