In its note, CRISIL says, "The recession staring at us today is different."
CRISIL points out, in the past 69 years, India has seen a recession only thrice – as per available data – in fiscals 1958, 1966 and 1980. In these each period of recession, reason has been the same - a monsoon shock that hit agriculture, then a sizeable part of the economy.
Explaining why a fourth recession is at the brink, CRISIL said, "For one, agriculture could soften the blow this time by growing near its trend rate, assuming a normal monsoon. Two, the pandemic-induced lockdowns have affected most non-agriculture sectors. And three, the global disruption has upended whatever opportunities India had on the exports front."
The rating agency believes India Gross Domestic Product (GDP) to suffer a staggering 25% contraction during the first quarter of FY21.
CRISIL has estimated India’s GDP growth to fall off a cliff and contract 5% in fiscal 2021. Earlier, the agency has cut down prediction to 1.8% growth from 3.5% growth. Adding it says, "Things have only gone downhill since."
While CRISIL expects non-agricultural GDP to contract 6%, agriculture could cushion the blow by growing at 2.5%.