Lockdown relaxation⁠— more than half of India's economy may reopen from Monday, says Nomura

Indian farmers harvest wheat crop during lockdown in New Delhi, India, Wednesday, April 15, 2020. India has announced some easing of lockdown restrictions, beginning April 20 to restart manufacturing and farming activity in rural areas to ease the suffering of millions of poor people.Photo/Altaf Qadri)
  • The Indian government has released guidelines to partially relax the Covid-19 lockdown in different parts of the country from April 20.
  • So far, under complete lockdown, less than a quarter of the $2.8 trillion economy was functional.
  • However, More than half of the Indian economy may start operating once the relaxations take effect from Monday, according to global financial services firm Nomura.
The Indian government has released guidelines to partially relax the Covid-19 lockdown in different parts of the country from April 20. So far, under complete lockdown, less than a quarter of the $2.8 trillion economy was functional. However, More than half of the Indian economy may start operating once the lockdown is relaxed from Monday, according to global financial services firm Nomura.

“The new guidelines will widen the scope of activities that can now operate (after 20 April). Our initial estimates suggest that compared with about 22% of the economy earlier, upto about 60% of the economy can now potentially become operational,” a report dated April 16 said.

Exempted sectorsContribution to GVA
Manufacturing5.30%
Storage0.10%
Telecom0.90%
Broadcasting and related services2.00%
Utilities2.70%
Financial services5.40%
Public administration & defence6.10%
Total22.40%


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Sectors that may reopen on April 20Contribution to GVA
Agriculture16.90%
Minerals2.30%
Logistics1.20%
IT services4.40%
Rural manufacturing6.70%
Construction (rural & partial urban)5.70%
Total37.20%

GVA stands for gross value added provides a dollar value for the amount of goods and services that have been produced in a country, minus the cost of all inputs and raw materials that are directly attributable to that production, according to Investopedia.

India had 14,378 cases of novel coronavirus infections as on April 18, including 480 deaths so far. The top five states with Covid-19 cases ⁠— Maharashtra, Delhi, Tamil Nadu, Madhya Pradesh, and Rajasthan ⁠— have 63% of all infected patients. And these five states make up for more than a third of India's Gross Domestic Product (GDP).

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StateContribution to India's GDP
Maharashtra14.10%
Delhi4%
Tamil Nadu8.50%
Madhya Pradesh4%
Rajasthan5.80%

Given the direct and indirect effects, we expect real GDP growth to fall to 0.5% (YoY) in 2020 (vs. 5.3% in 2019) and by -0.4% in FY21 (vs. 4.6% expected in FY20), the report added while warning that the progress of the Covid-19 pandemic must be monitored closely to determine the durability of the economic activity.

The partial reopening of the economy is likely to provide livelihood to a big majority of Indians who work in unorganised spaces, and live hand-to-mouth, whose survival has been threatened by the much-needed lockdown to contain the spread of the coronavirus.


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