"Despite the policy support so far, and our expectations of more, we believe that the nationwide shutdown, and rising public anxiety about the virus are likely to lead to a sharp deterioration in economic activity in March, and in the next quarter," the Press Trust of India news quoting the Goldman Sachs report said.
Even without the pandemic, India's growth was expected to slide to a decade low of 5 percent for the just concluded financial year on March 31 and the virus has only added fuel to the fire.
Several investment bankers and credit rating agencies over the past few days have lowered their estimates on Asia's third largest economy following the COVID-19 pandemic that has led to nationwide lockdown and halting the trade and economic activity.
British Investment Bank, Standard Chartered had slashed India's forecast to 2.7 percent from 4.4 percent earlier, while rating agencies Crisil and ICRA had revised it down to 5.2 percent and 2 percent respectively.
Stating that the 1.6 percent growth forecast will be deeper than the commonly perceived recessions that India has experienced in 1970s, 1980s and 2009, Goldman Sachs report said "Our sense so far is of a less aggressive policy stimulus by Indian policymakers compared to, for example, 2009."
It expects more action to follow from India's Central Bank beyond 75 basis point policy rate cut announced last month, which was preceded by an economic revival package of 22.6 billion U.S. dollars initiated by the government.
Sectors that will take a hit include the hotel, restaurants, recreations and education sector along with consumption as well as services, the report said.
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