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It said the three major contributors to GDP – private consumption, investment and external trade will all get affected due to the spread of the pandemic.
The KPMG report presented three scenarios to explain the economic effects of COVID-19. In the scenario of quick retraction across the globe by April-end to mid-May, the report said: “India’s growth for 2020-21 may be in the range of 5.3 to 5.7 per cent, though this scenario looks distant at this moment”.
In the second scenario where India is able to control COVID-19 spread, but there is a significant global recession, the KPMG report said India’s growth is expected to be in the range of 4-4.5 per cent.
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“Prolonged lockdowns would exacerbate economic troubles. India’s growth may fall below 3 per cent under this scenario,” it added.
These growth projections compare to an estimated 5 per cent growth rate in 2019-20.
The report said steps taken to contain the virus spread such as the nationwide lockdown have brought economic activity to a near-standstill, with impacts on both consumption and investment.
“While Indian businesses, barring a few sectors, can possibly insulate themselves from the global supply chain disruptions caused by the outbreak due to relatively lower reliance on intermediate imports, their exports to COVID-19 infected nations could take a hit,” it said.