Citigroup Inc has sharply revised its forecast for the Indian economy lower as the country's reported COVID-19 infection cases near 7-lakh-mark.
On Monday, India surpassed Russia to become the third-worst affected country in the world, after recording another new high in the number of daily reported cases.
The country's GDP (Gross domestic product) is expected to contract by 6 percent in the financial year 2020-21 as per Citi's new estimates, much steeper than its previous estimate for a 3.5 percent decline, a Bloomberg report said.
The revision is largely due to a cut to April-June period forecast where the economy seen slumping 21 percent against 16 percent estimated earlier, said analysts led by Samiran Chakraborty, chief India economist in Mumbai, as quoted by a Bloomberg report citing a report written by the group to its clients.
After imposing a strict lockdown in the last week of March to curb the spread of the virus, the Indian government opened many parts of the country in May to avoid losses of jobs and revive economic activity. However, the number of infections since the reopening has increased rapidly.
On Sunday, the health ministry reported nearly 25,000 new cases, a new record high in daily numbers since the coronavirus outbreak.
"The delay in flattening the curve has been one of the primary reasons for our forecast revision," Chakraborty and Baqar M. Zaidi of Citigroup wrote. "The spread of the virus has largely followed the 'Most Severe' scenario in our forecasts."
The forecast of a 6 percent decline is steeper than a 4.5 percent decline estimated by International Monetary Fund and 5 percent contraction predicted by Goldman Sachs Group Inc.