India to see U/L-shaped recovery; package execution key – Rabobank

Hugo Erken, Head of International Economics at Rabobank, said in its latest note, the Indian economy is likely to see a U/L shaped recovery rather than a V-shaped recovery.

Key quotes

"India’s economy could even emerge stronger from COVID-19 crisis if the federal government’s INR20-trillion stimulus package that addresses structural weakness is properly executed."

“Ultimately, we expect the COVID-19 crisis to cost each Indian between INR8,000 to INR16,000 in 2025 of missed economic growth compared to a benchmark scenario of no pandemic, depending on the shape of the recovery.”

“In case of a U/L - shaped recovery, we also expect structural growth to decline from 5.7% to 5%, caused by lower investment and productivity growth.”