Brokerages have sharply reduced India’s growth forecast and estimated that the 21-day blockage would cost $ 120 billion, or about 4% of GDP.
Barclays reduced India’s GDP for EX21 to 3.5% from 5.2% earlier, while CRISIL said downside risks have become more pronounced for the economy after the announcement of the locking. Industries and SMEs will be the most affected since they will generate zero income for three weeks and daily workers will be the most affected.
Experts suggest lower rates as well as loan forbearance and a special liquidity window for banks and NBFCs. The RBI should also engage in bond purchases via OMOs and a stimulus package, they say.