India to extend national lockdown for the third time
India’s national lockdown, initially slated to end today, has been extended. Indian President Narendra Modi is expected to announce that the new extension will last until May 31.
With the extended lockdown, India’s GDP growth is projected to fall to 0%, far lower than the original 5.8% estimated at the beginning of the year. India’s economy has suffered a loss of over $234 billion as of early May. In addition, the country’s unemployment rate has spiked to 27% from around 7% in March.
On May 13, Modi’s government announced a stimulus package of $266 billion, equivalent to 10% of India’s GDP, in an attempt to revive the economy. This package is intended to make India more self-reliant by strengthening local businesses. The stimulus will provide loans for small businesses, like farms and street vendors, but also give aid to critical economic sectors like coal mining and aviation.
The current stimulus is one of the largest in any developing nation. The package will also include credit guarantees and delayed principal repayments to allow businesses to focus on rebuilding instead of worrying about paying back debt immediately. If businesses are able to successfully rebuild using stimulus loans, India may be able to avoid a recession in the short-term, even with an extended lockdown.
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