Key messages

• Base-case GDP growth expected at 1.8% for fiscal 2021. Assumptions include effect of the pandemic subsiding materially in April-June quarter, a normal monsoon, and minimum fiscal support of Rs 3.5 lakh crore
  
• Risks tilted towards the downside scenario of zero GDP growth
  
• Permanent loss of ~4% of real GDP. Fiscal 2022 likely to see a V-shaped recovery at over 7% real GDP growth. However, its sustenance will not be able to lift GDP volume to its trend path even by 2024
  
• Large swathes of informal workforce of India are vulnerable to deep slowdown, particularly in construction, manufacturing and services sector
  
• External vulnerability likely to be low, with current account deficit (CAD) projected at 0.2% of GDP and forex reserves adequate, but domestic vulnerability rising. A risk-off scenario will, however, keep currency volatile
  
• Agricultural sector could be the bright spot as a bumper winter crop (rabi) is being harvested. But it will need support via fiscal measures aimed at reducing labour constraints, input provision and logistics support
  
• States accounting for 33% of population and 41% of national output are most at risk from Covid-19
  
• Fiscal support will need to be upped at the central and state level in scale and scope to go beyond vulnerable households and cover vulnerable firms as well